The book publishing industry was just beginning to grapple last week with the many repercussions the Borders Group Chapter 11 filing will bring to all facets of the industry.
The most immediate impact, of course, is the loss of revenue associated with the bankruptcy itself. The 30 largest creditors are owed approximately $314 million, with Penguin Group (USA) owed the most, at $41.1 million, followed by Hachette Book Group, out $36.9 million. Penguin issued a statement last week, saying it will work with Borders to help it emerge as a stronger retailer, and noted that it "has taken appropriate steps to mitigate the financial impact of the company's bankruptcy on Penguin."
How hard publishers' profits will be hit is hard to judge. Simon & Schuster released its 2010 results the same day Borders filed for Chapter 11. Despite taking a charge for Borders, S&S's operating income increased 43% over 2009. S&S CEO Carolyn Reidy said she hoped the provision S&S took last year would make it unnecessary to take another charge this year, but acknowledged she couldn't be sure. "It's a fluid situation," she said.
Macmillan is not only owed $11.4 million from Borders but is out approximately $10 million from the bankruptcy of its Canadian distributor, H.B. Fenn.
HarperCollins is owed $25.8 million from Borders, and its Zondervan subsidiary is owed $1.9 million. Ingram, which had been supplying Borders after the largest houses stopped shipping books to Borders after it missed its December payment, is not among the largest creditors because, as the filing notes, Borders "generally paid cash on delivery" for inventory in January.
Full story - PW
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