Publishers Lunch
News Corp. reported results for their fourth quarter and
full fiscal year, ending June 30, on Wednesday after the close of the market.
HarperCollins had sales of $390 million, up 8 percent from $361 million a year
ago and EBITDA of $33 million in the fourth quarter, flat compared to the same
period last year. But in "adjusted" sales, leaving aside Harlequin's
results, Harper sales fell 9 percent in the final quarter, down $33 million to
$328 million, and EBITDA fell 18 percent, down $6 million, to $27 million.
Harlequin added $73 million in sales for the quarter, and foreign exchange
provided a boost of $11 million.
Full-year results tell a similar picture: Overall, sales of $1.667 billion were up 16 percent from$1.434 billion a year ago and EBITDA of $221 million was up 12 percent from $197 million in fiscal 2014. But in the adjusted results, core Harper sales fell $31 million to $1.399 billion, and EBITDA was down $3 million to $194 million.
Harlequin added $288 million sales and $28 million in EBITDA for 11 months of results (the acquisition closed August 1, 2014), and there was a $20 million gain from foreign exchange. Looking ahead to their new fiscal year, on the investor conference call cfo Bedi Singh said the Harlequin acquisition "remain[s] on track with our cost synergy targets of $20 million and [we] expect the bulk of the savings to be realized in fiscal 2016." He also noted: "We are very excited about our pipeline for fiscal 2016, which was highlighted by the release in July of Harper Lee's Go Set a Watchman, including...the Spanish rights for Watchman. However, unlike Divergent, Watchman was skewed heavily towards physical books. And given the higher marketing costs and author advance it will result in more modest profitability."
The company said it had "strong backlist sales in the general books category, resulting from the success of American Sniper" in the fourth quarter, "partially offset by lower revenues from the Divergent series" (which had accounted for 19 million net units for fiscal 2014.) Lower expenses also contributed to the increased full-year EBITDA, but did not have as much of an impact compared to the declining Divergent revenues in the fourth quarter.
eBooks comprised 23 percent of overall sales for the quarter, slightly up up on the prior year, when ebooks were 22 percent of revenues. For the year, ebooks also represented 22 percent of overall sales, holding steady from 22 percent in the previous fiscal year.
Parent company News Corp. had slightly higher sales of $2.14 billion in the quarter and improved EBITDA of $191 million, ahead of analysts' expectations and sending shares up in after-hours trading. Perhaps as important, the company finally admitted failure in their oversized ambition to establish a major education business under the Amplify banner. They took a $371 million impairment charge against Amplify business, marking down its fair value on drastically reduced revenue expectations. "The Company determined it would cease actively marketing Amplify's Access products to new customers; however, it will continue to provide service and support to its existing customers."
They are also "reviewing strategic alternatives with respect to Amplify's remaining digital education businesses" -- which is investor-speak for looking for a buyer. In fact, in the investor call, ceo Robert Thomson put it more plainly, admitting, "We are in the final phase of negotiation with a potential acquirer, and we're in an advanced stage of negotiation." Shareholders reacted positively to unloading Amplify, sending the stock up nicely Thursday morning.
Full-year results tell a similar picture: Overall, sales of $1.667 billion were up 16 percent from$1.434 billion a year ago and EBITDA of $221 million was up 12 percent from $197 million in fiscal 2014. But in the adjusted results, core Harper sales fell $31 million to $1.399 billion, and EBITDA was down $3 million to $194 million.
Harlequin added $288 million sales and $28 million in EBITDA for 11 months of results (the acquisition closed August 1, 2014), and there was a $20 million gain from foreign exchange. Looking ahead to their new fiscal year, on the investor conference call cfo Bedi Singh said the Harlequin acquisition "remain[s] on track with our cost synergy targets of $20 million and [we] expect the bulk of the savings to be realized in fiscal 2016." He also noted: "We are very excited about our pipeline for fiscal 2016, which was highlighted by the release in July of Harper Lee's Go Set a Watchman, including...the Spanish rights for Watchman. However, unlike Divergent, Watchman was skewed heavily towards physical books. And given the higher marketing costs and author advance it will result in more modest profitability."
The company said it had "strong backlist sales in the general books category, resulting from the success of American Sniper" in the fourth quarter, "partially offset by lower revenues from the Divergent series" (which had accounted for 19 million net units for fiscal 2014.) Lower expenses also contributed to the increased full-year EBITDA, but did not have as much of an impact compared to the declining Divergent revenues in the fourth quarter.
eBooks comprised 23 percent of overall sales for the quarter, slightly up up on the prior year, when ebooks were 22 percent of revenues. For the year, ebooks also represented 22 percent of overall sales, holding steady from 22 percent in the previous fiscal year.
Parent company News Corp. had slightly higher sales of $2.14 billion in the quarter and improved EBITDA of $191 million, ahead of analysts' expectations and sending shares up in after-hours trading. Perhaps as important, the company finally admitted failure in their oversized ambition to establish a major education business under the Amplify banner. They took a $371 million impairment charge against Amplify business, marking down its fair value on drastically reduced revenue expectations. "The Company determined it would cease actively marketing Amplify's Access products to new customers; however, it will continue to provide service and support to its existing customers."
They are also "reviewing strategic alternatives with respect to Amplify's remaining digital education businesses" -- which is investor-speak for looking for a buyer. In fact, in the investor call, ceo Robert Thomson put it more plainly, admitting, "We are in the final phase of negotiation with a potential acquirer, and we're in an advanced stage of negotiation." Shareholders reacted positively to unloading Amplify, sending the stock up nicely Thursday morning.
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