The Big 5 is still 5.
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 kill fee AND the high-flying publishing company.
Q3 Company Reports
Speaking of the still-single Simon & Schuster, the company keeps getting more good-looking. Through the first 9 months of this year, their hot streak continued. Revenue was up 19% to $863 million, and profits climbed an astonishing $223 million (or 29%). And those results are compared to our all-time favorite year of 2021. If Paramount is still looking to unload it, what do you say we go halves-ies?
S&S isn’t the only Big 5-er to post positive numbers this quarter. Hachette Book Group’s French parent saw a 12% jump in sales in Q3, with the U.S. subsidiary reporting an increase of 4.7% thanks in large part to adult fiction sweetheart Colleen Hoover’s latest.
The numbers from downtown aren’t so rosy (that was a Manhattan geography reference for any fellow map geeks). HarperCollins had a rough calendar Q3 (their fiscal Q1 2023). Amazon’s “inventory right-sizing”, plus that pesky inflation, the continuing supply chain struggles, and even exchange rates, forced revenue down by 11% and earnings dropped a hefty 54% (nearly a third of the revenue hit was the result of currency fluctuation—can’t do much about that).
Anyone Wanna Talk More About Amazon?
Well, we’re gonna.
With the release of its Q3 required SEC filings, Amazon reported that it expects its Q4 growth to soften. After reporting total sales up 15% and online sales up 7%, the e-tail giant signaled a slowing in sales, with an expected lowering of total sales growth – up only 2%-8% in the last 3 months of the year (yes, a bad quarter for Amazon is still an up quarter).
A slowing of the juggernaut might signal a silver lining for retail book publishing. But a recent report from the American Booksellers Association says, “not so much.” According to the report, the ABA has found that the negative impact of Amazon on brick-and-mortar retail (all products) has led to the elimination of 136,000 retail establishments occupying an estimated 1.1 billion square feet of commercial space. Additionally, 1.7 million jobs were lost at those shuttered or shrunken retailers (though Amazon’s hiring covered about half of those job losses).
Not All Bad News
Just when you thought the Update was as negative as a mid-term Senate campaign in a swing state, our friends at NPD BookScan pointed out that perhaps the Update doth protest too much. While we correctly reported last month that sales revenue fell nearly 5% in the first 3 quarters of this year, the fact is that the total print units sold during that period was the second-highest figure ever (or at least as far back as BookScan has been counting). Through the first 9 months of 2022, publishers have sold 543 million print units—down only 1.9% (3.4 million units) from the same pandemic-stoked period in 2021.
And remember, authors, print units are still the most profitable for you – and everyone else (except maybe Jeff Bezos, but he can absorb it).
Here are the weekly results for October:
Week ended October 1, 2022: Down 9.6%
Week ended October 8, 2022: Down 8.0%
Week ended October 22, 2022: Down 9.1%
Week ended October 24, 2022: Down 14.2% (Ouch!)
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