Audiobooks Continue Their Hot Streak

The Audio Publishers Association reported sales numbers for 2022 at approximately $1.8 billion – a 10% jump over 2021. That was the 11th consecutive year of double-digit growth for the audio segment—the current belle of the publishing industry ball. That followed a blistering 25% jump in 2021 over 2020. The group’s survey of Americans 18 and older showed that 53% of American adults have listened to an audiobook, up from 45% last year. That’s some incredible saturation.  

So Much for the Sunny Side of the Street

According to the good people at BookScan (I still can’t remember how to spell their new moniker), unit sales for the first half of 2023 finished down 2.7% to 353.5 million.  After a flat Q1 2023 (helped by a one-time prince), Q2 tipped us into the negative – and that’s compared to the first half of 2022 which fell 6.6% below the pandemically inflated first 6 months of 2021. By way of an equalizer, the slowing numbers from the first 6 month...

Not Too Shabby

In these uncertain economic times, good news seems even gooder. The Association of American Publishers (AAP) reported its Q1 2023 publishing industry results last week with an increase in total sales of 3.2% over Q1 2022. March 2023, in and of itself, shot up 6.6% in a year, with audio and ebook segments each posting double-digit gains both for the month and for the quarter.

The AAP also put out its final report on the 2022 results, with the total sales for the year slipping only 2.6% below banner 2021. That figure bested their preliminary “negative-Nancy” projection of a 6.4% drop. The early projections did not include K-12 educational publishing, which exceeded the prior year by a whopping 16.6%, and helped offset a 6.1% drop in trade sales.

As promised in last month’s issue, we now have Q1 results from Big 5 member, HarperCollins.  After some documented struggles—and some layoffs—HC appears to have stabilized. Following a notable drop in the last half of 2022, reve...

Back on the Auction Block

One of the lone bright spots in the publishing industry, league-leading Simon & Schuster posted another banner quarter.  Q1 2023 saw sales increase 19% and operating income jump 18%. Regular readers of the Update will remember that these results are being compared to a “gravity-defying” 2022.  But, all the S&S success isn’t fazing corporate parent Paramount Global.  Paramount still insists that they want to off-load this “non-video” cash cow.  

If anyone is looking to invest a couple of billion dollars, seems like a solid opportunity to us.

Meanwhile, Penguin Random House—the former suitor whose advances were rebuffed by the Justice Department—was saved by the (former) prince. Over 4 million copies of Harry Windsor’s “SPARE” were credited for German parent Bertelsmann’s Q1 2023 sales increase of 5.6%.

One last item in the “good news” category, our brick-and-mortar bookstore friends posted a sales increase of 10.7% in February 2023 over the same pe...

Publishers Begin to Report Full-Year Results 

As the various regulatory filings trickle into the folks at the SEC and beyond, we start to get a more in-depth picture of the health of the industry.  Unit sales are the closest measure we have to any “real-time” data in this industry, but eventually, profits are what keep the presses running—and BookScan reports can’t help us there.

Case in point, the 800-lb. Penguin (Random House) saw sales rise 4.8% in 2022 over 2021.  But that pesky inflation, and some exchange rate shenanigans, left PRH parent Bertelsmann with only bad news for their shareholders, as earnings dropped 11.8%.  The company didn’t blame the massive legal bills or the hefty $200 million kill fee from the failed Simon & Schuster deal, but those couldn’t have helped. 

Deal Reports in Decline

Another less scientific, but leading indicator is the number of publishing deals signed in a given period – and then reported to our friends at Publishers Marketplace (less scientifi...

 What is Happening at Simon & Schuster?

Unless you’re new to the Update, you’ve already heard about the trend-bucking results that S&S has been having for the last couple of years. And 2022 was no exception. Sales were up 10%, topping $1.1 billion. Even better, operating income jumped 16% to $248 million. Some enviable numbers, to be sure. All this, while CEO Jonathan Karp and his moneymaking colleagues worked under the cloud of uncertainty that was the pending—now imploded—sale of the company to Penguin Random House.

Yet, Simon & Schuster parent Paramount continues to say that the publishing juggernaut isn’t core to their video-based business and still intends to sell it off. Man, if that’s a “non-core asset,” I would like to have one or two “non-core assets.” Reuters reported that a Wall Street firm is in talks with Paramount to shop S&S with the target price being between $2 billion and $2.5 billion. If PRH was willing to pay $2.2 billion two and a half years ago, you have to...

Is the End in Sight for Amazon?

No, of course not.

But the multi-category behemoth just posted its first loss since 2014…and to the tune of a cool $2.7 billion.  That’s more than petty cash, even at one of the world’s biggest companies. While their holiday sales grew 9% from the prior year, Amazon took a huge loss on its investment in the electric truck maker, Rivian, whose stock value plunged 82% after Amazon took a 20% stake.  

So, it wasn’t just me…

The other drag on profits came from Amazon’s pandemic-fueled growth plan.  CEO Andy Jassy commented that in just a couple of years during the pandemic, Amazon nearly doubled the warehouse space that it had previously built over the prior 25 years.  Amazon has announced a pull-back on many of those new warehouses, and last month revealed a plan to cut 5% of its workforce (18,000 jobs) this year.  Another astonishing figure from Jassy that exacerbated the losses in 2022: Amazon grew its “last-mile transportation network”—aka, all those...

2022 is behind us. And while it was a down year for the industry as a whole, there are reasons for hope. But a little less hope if you work at Amazon.

Final (preliminary) Numbers

With 2022 in the books (I'm sure we’ve used that one before), sales of print books finished 6.5% behind 2021. The decline was anticipated, as the world returned to a sense of normalcy, and with it more opportunities for entertainment besides reading.  But, on the bright side of the street, 2022 was still 11.8% over pre-pandemic 2019.  Again, for those avid readers of the Update, you’ll recall that we were pleased as punch about 2019 while it was happening.  

Our analyst colleagues at BookScan note that a couple of symptoms from the pandemic carried on into 2022.  First, with fewer brick-and-mortar stores, it was harder for new books to get their footing, so frontlist sales continued to slip (down 10.5% from 2021). Then, with that pesky inflation still lurking in every corner of commerce, hardcover books too...

The Christmas shopping season is here—with not a bang, but a whimper. But more on that later. 

Dohle-d Out!

From the “Didn’t See That Coming” file, Penguin Random House CEO Markus Dohle shocked much, if not all, of the industry, abruptly announcing his departure from the apex publisher effective at the end of 2022.  He did oversee the company during the very long and enormously expensive—yet failed—effort to acquire fellow Big 5 competitor, Simon & Schuster. But that sure didn’t seem like something people were blaming on Dohle.

S&S parent, Paramount, did decide to take their $200 million ball and go home—in the form of the negotiated kill fee due if PRH was unable to affect a closure of the deal in two years. In theory, that puts one of the publishing industry’s crown jewels back on the auction block. But with the Justice Department’s trust-busting win last month, it’s hard to see any competing publishers trying to buy where PRH failed.  If they are big enough to fund a $2 billion (...

The Big 5 is still 5. 

Pan-caked! 

Just before leaving for her new appointment to the DC Circuit Court of Appeals, Judge Florence Pan issued her ruling on our Trial of the Century – at least until another Big 5 publisher tries the same stunt.  

Determining that the proposed acquisition by Big #1 Penguin Random House of Big #3 Simon & Schuster would “substantially lessen competition in the market for the U.S. publishing rights to anticipated top-selling books,” Judge Pan officially blocked the merger.  PRH has threatened to appeal, but some sources aren’t so sure that S&S parent Paramount will be willing to wait around.

In an interesting deal point, the original agreement between the publishing rivals included a $200 million expiration fee if the deal wasn’t consummated within 2 years of the November 24, 2020, agreement date. With S&S still raking in record sales and even higher profits (see below), maybe the media/movie giant will think twice about keeping the enormous kil...

We all love the fall.  Crisp temperatures, colorful trees, and—best of all—football.  But this year, it’s more than just the leaves that are falling.

3rd Quarter Results Head South for the Winter

The early results are in (who’s ready for election season?!), and the good people at NPD BookScan are telling us the results are not good. Through the first nine months of 2022, book sales have slid 4.8% below the same period in 2021. Adult fiction readers answered the bell, driving sales up an industry-best 9.2% for the year thus far. But in the all-important category of adult non-fiction, the bestselling book this year is “Atomic Habits” by James Clear—which came out 4 years ago! (I hear it’s pretty good).

At HarperCollins, the fall has ushered in a falling headcount.  In what might be the direst harbinger in this month’s Market Update, the Big 5 publisher (or is it 4 now?) announced an “elimination of a small [undisclosed] number of positions.”  CEO Brian Murray also signaled a hiring fr...