5/02/2014- Forbes
Rupert Murdoch’s News Corp has acquired Harlequin, the world’s largest romance book publisher, in an all cash deal for C$455 million ($415 million U.S. dollars). It will be operated as a division of HarperCollins, which News Corp NWSA 0% owns and operates.
Unlike HarperCollins and some of the other largest publishers in the world, which have fared fairly well through the digital book transition, Harlequin has struggled to replace dwindling paperback sales with its growing digital sales.
When digital books started to scale, Harlequin was among the companies that saw the biggest gains. Romance readers took to the format as fast as anybody. The problem, as Harlequin CEO Craig Swinwood told me recently, was that they didn’t replace shrinking paperback sales fast enough.
As a result, the company has seen four straight years of revenue declines:
2013: C$398 million
2012: C$426.5 million
2011: C$459 million
2010: C$468 million
2009: C$493 million
Likely because of this trajectory, News Corp paid little more than the annual revenue of the company in the deal. Aside from a pretty good price, here are three reasons the folks at News Corp thought this was a good idea:
1. HarperCollins wants to get big: Following the Penguin Random House merger, the remaining four worldwide publishers collectively known (now) as “the big five” were under pressure to get larger (that’s the rumor, anyway). Penguin Random House is now as large as the other four largest publishers combined. HarperCollins was rumored to be in talks with Simon & Schuster about a merger. Speculation swirled around Hachette and Macmillan, too. Barring the ability to merge with another billion-dollar publisher, HarperCollins has done the next best thing, acquiring another very large publishing house
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Unlike HarperCollins and some of the other largest publishers in the world, which have fared fairly well through the digital book transition, Harlequin has struggled to replace dwindling paperback sales with its growing digital sales.
When digital books started to scale, Harlequin was among the companies that saw the biggest gains. Romance readers took to the format as fast as anybody. The problem, as Harlequin CEO Craig Swinwood told me recently, was that they didn’t replace shrinking paperback sales fast enough.
As a result, the company has seen four straight years of revenue declines:
2013: C$398 million
2012: C$426.5 million
2011: C$459 million
2010: C$468 million
2009: C$493 million
Likely because of this trajectory, News Corp paid little more than the annual revenue of the company in the deal. Aside from a pretty good price, here are three reasons the folks at News Corp thought this was a good idea:
1. HarperCollins wants to get big: Following the Penguin Random House merger, the remaining four worldwide publishers collectively known (now) as “the big five” were under pressure to get larger (that’s the rumor, anyway). Penguin Random House is now as large as the other four largest publishers combined. HarperCollins was rumored to be in talks with Simon & Schuster about a merger. Speculation swirled around Hachette and Macmillan, too. Barring the ability to merge with another billion-dollar publisher, HarperCollins has done the next best thing, acquiring another very large publishing house
More
