HarperCollins to buy Houghton Mifflin unit
HarperCollins, one of the five largest U.S. publishing companies, said Monday that it had agreed to buy Houghton Mifflin Harcourt Books and Media, the trade publishing division of Houghton Mifflin Harcourt, for $349 million.
The acquisition will help HarperCollins expand its catalog of backlist titles at a moment of growing consolidation in the book business. Houghton Mifflin publishes perennial sellers by well-known authors such as J.R.R. Tolkien, George Orwell, Robert Penn Warren, Philip Roth and Lois Lowry, as well as children’s classics and bestselling cookbooks and lifestyle guides.
News of the sale was reported earlier by The Wall Street Journal.
By acquiring Houghton Mifflin,
HarperCollins, which is owned by Rupert Murdoch’s News Corp., will be better able to compete as publishing has come to be dominated by the biggest players.
The book business has been transformed by consolidation in the past decade, with the merger of Penguin and Random House in 2013, News Corp.’s purchase of romance publisher Harlequin and Hachette
Book Group’s acquisition of Perseus Books. Last fall, ViacomCBS agreed to sell Simon & Schuster to Penguin Random House for more than $2 billion, in a deal that has drawn scrutiny from antitrust regulators and has raised concerns among booksellers, authors and agents.
Several industry groups, including the American Booksellers Association and the Authors Guild, have said that the Simon & Schuster deal could destabilize the industry and leave authors with fewer opportunities. Critics of the deal have also noted that consolidation often leads to more consolidation, as smaller companies try to bulk up to compete.
The sale of Houghton Mifflin will further transform the publishing landscape at a time when the industry has been dramatically affected by the pandemic. Publishers have seen a huge shift to online retail, with e-commerce giants like Amazon and big-box stores like Target and Walmart gaining an even greater share of book sales, while many independent bookstores have struggled. At the same time, as more people have turned to books for entertainment during lockdown, publishers benefited from a surge in sales. Revenues in 2020 climbed to $8.6 billion, an increase of nearly 10%, according to the Association of American Publishers, which tracks revenue from about 1,360 publishers.
By acquiring a midsize
trade publisher, HarperCollins, a global publisher that has more than 120 imprints and publishes 10,000 new books a year, will gain an even larger backlist. HarperCollins will also take over Houghton Mifflin’s warehouse facility in Indiana, giving it a bigger distribution footprint.
“Global demand for books — print and digital — has never been higher than it is now,” Brian Murray, president and CEO of HarperCollins Publishers, said in a statement. “We expect faster growth of the combined companies at a time of rapid growth in book consumption.”
Educational publishers have not fared as well, as the closing of schools across the United States cut off a critical revenue stream. Revenue for educational publishers fell 10.9% in 2020, the Associ
ation of American Publishers found.
Houghton Mifflin, the largest learning technology company in the K-12 market, saw its sales fall last year because of a steep drop in its education division, though sales in its consumer publishing business were strong.
“Last year, and still to this day, the pandemic has really disrupted K-12 education,” said Jack Lynch, Houghton Mifflin’s president and CEO. “It was a forcing mechanism for the rapid adoption of technology.”
The company put its trade publishing division up for sale last fall, as it aims to focus on its core business of educational publishing and technology, and to pay down its debt. The deal is expected to close in the second quarter of 2021.