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Harlequin to be sold to News Corp, become division of HarperCollins

harlequinSince news of the Penguin Random House merger broke in 2012, rumours have been swirling that HarperCollins and Simon & Schuster might be the next to consolidate, which is one reason why this morning’s news that Torstar is selling Harlequin Enterprises to News Corp. for $455 million came as a surprise to many.

Pending regulatory approval from U.S. and Canadian governments, and consent from the Department of Canadian Heritage and Torstar’s shareholders, the Toronto-based romance publisher is expected to become a standalone division of HarperCollins, a News Corp. subsidiary, later this year.

Harlequin will remain headquartered in Toronto under the leadership of publisher and CEO Craig Swinwood, reporting to New York–based HarperCollins CEO Brian Murray. Swinwood, who has been with Harlequin for 26 years, took over from longtime publisher Donna Hayes on Jan. 1.

Murray says it’s too soon to say whether the deal will mean any consolidation of jobs or services for either Harlequin or HarperCollins Canada, which is also based in Toronto.

“We’re committed to the management team. I don’t see any changes in direction or how they operate,” he says. “Possibly down the road we’ll look at efficiencies, but right now we’re focused on trying to close the deal.”

It’s been a challenging couple of years for Harlequin. The international success of E.L. James’s Fifty Shades of Grey (published in 2012 by Random House), which spawned renewed interest in the erotica category, did not translate to sales for Harlequin. In 2013, the company restructured, with revenue falling 6.7 per cent to $47 million. Operating income fell 28.9 per cent to $397 million.

Despite the sales decrease, Harlequin – founded in Winnipeg in 1949 as a paperback reprinting company – has long been considered a Canadian publishing success story. Its titles are published in 34 languages and sold in more than 100 international markets; 95 per cent of which are outside Canada. To date, more than 1,300 authors have been published by Harlequin, which releases more than 110 titles monthly.

Although Harlequin’s name is synonymous with women’s romance fiction, the company has grown its non-fiction division to include cookbooks, self-help, fitness, and other lifestyle categories. Harlequin is also widely acknowledged as one of the first legacy publishers to embrace e-publishing, launching one of the first digital-only imprints. Last year digital content accounted for 24 per cent of revenue.

“Harlequin and HarperCollins both have been aggressive in the digital space,” says Murray, who expects that the two companies “will share best practices.” He praises Harlequin for its quick transition into the  digital market and its successes with online direct-to-consumer programs.