Revenue at Scholastic rose 3% in the third quarter ended February 28, over the comparable period a year ago, from $336.2 million to $344.7 million. However, investments to improve the company’s profitability and one-time charges led to a net loss of $49.2 million in the most recent quarter, up from $15.4 million a year ago. Despite the higher loss, Scholastic chairman Dick Robinson said the company’s results were in line with expectations. He noted that Scholastic is upping its per-share earnings forecast for the fiscal year ending May 31.
News Corp announced today that it has entered into an agreement to acquire the Books & Media segment of Houghton Mifflin Harcourt (HMH Books & Media). The business will be operated by HarperCollins Publishers, a News Corp subsidiary.
HMH Books & Media is home to one of the most extensive and successful backlists in the publishing industry, with a history of strong profitability. Backlists have proven to be a sustainable and growing source of revenues, high margins and cash flow for publishers, particularly evergreen properties with broad, enduring and global appeal. In calendar year 2020, over 60% of HMH Books & Media revenues were generated by its formidable backlist.
Among the most popular of the more than 7000 titles in the HMH Books & Media backlist are: The Lord of the Rings trilogy and other titles by J.R.R. Tolkien; 1984 and Animal Farm by George Orwell; and All the King’s Men by Robert Penn Warren, among many others. HarperCollins currently has rights to J.R.R. Tolkien’s works in the British Commonwealth.
HMH Books & Media also has a first-rate frontlist in the lifestyle and children’s segments with recent best-sellers like Antoni in the Kitchen, Instant Pot Miracle, Wow in the World: The How and the Wow of the Human Body, Little Blue Truck’s Valentine and the beloved Click series of middle grade graphic novels.
HMH Books & Media is being acquired by News Corp for $349 million in cash and the acquisition is subject to customary closing conditions, including regulatory approvals. In calendar year 2020, HMH Books & Media had strong growth with net sales of $191.7 million, and Adjusted EBITDA of $26.6 million1, based on public filings.
HarperCollins expects to realize immediate cost savings, accumulating to more than $20 million annually within two years, including manufacturing, distribution and other cost efficiencies. HarperCollins also anticipates revenue synergies by leveraging its global scale and further expanding licensing opportunities. The acquisition is expected to close in the fourth quarter of fiscal 2021.
HMH Books & Media has a thriving Productions business which repurposes its popular brands across media platforms. HMH Productions is involved in the animated series Carmen Sandiego on Netflix, which will also be a live-action feature film, and has other television projects currently in development.
The acquisition will include the business’s extensive children’s and young adult divisions, which publish such classics as: Curious George; Martha Speaks; Five Little Monkeys; The Polar Express; the Little Blue Truck series; Mike Mulligan and His Steam Shovel; The Little Prince; and Stellaluna. Works by young adult authors, including Lois Lowry, author of The Giver, are also a strong part of the HMH Books & Media catalogue.
“There is a resurgence in reading and listening to books, and we believe the brilliant HMH Books & Media backlist and first-rate frontlist have an enduring and increasing value. Timeless writing is a timely source of revenue and the potential to create highly profitable audio and video works flourishes with each passing digital day,” said Robert Thomson, Chief Executive of News Corp. “The HarperCollins collection will be bolstered for children and young adults, and authors around the world will have a larger platform for their creativity and ingenuity. It is crucial to expand in an era in which emerging monopolies threaten the creative marketplace, so we welcome J.R.R. Tolkien, Virginia Woolf, George Orwell and many, many other distinguished writers to HarperCollins.”
“Combining HMH Books & Media’s strong catalog with HarperCollins’s global platform will allow for increased investment in HMH Books & Media’s trade programs and we expect faster growth of the combined companies at a time of rapid growth in book consumption,” said Brian Murray, President and CEO of HarperCollins Publishers. “Joining HMH Books & Media’s media productions team and the HarperCollins Children’s global catalog will open up new animation and gaming opportunities as we look to accelerate the expansion of our IP across multiple formats.”
HMH Books & Media has a flourishing audiobooks business, launched in 2019, which is expected to add value to HarperCollins’s own large and growing audiobook revenue stream.
Other titles and series in HMH Books & Media include The Best American Series, the Betty Crocker and Better Homes and Gardens cookbooks and the best-selling How to Cook Everything series and The Whole30 franchise.
HarperCollins Publishers is the second-largest consumer book publisher in the world. In the most recent quarter, ending December 31, 2020, HarperCollins had strong revenue growth across every category, with revenues increasing $102 million, or 23%, compared to the prior year. Digital sales increased 15% compared to the prior year, driven by growth in both e-book and downloadable audiobook sales. Segment EBITDA for the quarter increased $41 million, or 65%, compared to the prior year.
Headquartered in New York, HarperCollins has publishing operations in 17 countries. With two hundred years of history and more than 120 branded imprints around the world, HarperCollins publishes approximately 10,000 new books every year in 16 languages, and has a print and digital catalog of more than 200,000 titles. Writing across dozens of genres, HarperCollins authors include winners of the Nobel Prize, the Pulitzer Prize, the National Book Award, the Newbery and Caldecott Medals, and the Man Booker Prize. HarperCollins has been home to authors who include Mark Twain, the Brontë sisters, Thackeray, Dickens, John F. Kennedy, Martin Luther King Jr., Maurice Sendak, Shel Silverstein, and Margaret Wise Brown.