News Corp announced on Friday that they are buying Harlequin for $455 million in cash from the Canadian media conglomerate Torstar. The leading romance publisher will retain its independence as division of HarperCollins, News Corp's publishing subsidiary.
Torstar acquired control of Harlequin in 1975 and full ownership in 1981. The romance publisher publishes the work of more than 1,300 authors and releases over 100 titles per month, with approximately 40% revenues coming from books published in languages other than English.
The acquisition will need regulatory approval, including in Canada and the US, and it will also require approval under the Investment Canada Act.
While the press release would have you believe that time are great, it's worth noting that Harlequin's revenues peaked in 2011 ($459) and dropped in both 2012 ($426 million) and 2013 ($398 million). This looks to me like Harlequin is not making the transition to digital as well as some would like.
HarperCollins, on the other hand, has at least been treading water. Their most recent quarterly report showed some growth ($391 million in revenue, up 4% from $377 million). In terms of revenue HC is about 4 times the size of Harlequin, though of course that is spread across many different genres and categories.
Harlequin is also not handling the rise of self-published authors all too well. What I have been hearing is that Harlequin isn't paying enough in royalties to keep their more successful authors from departing for greener pastures, both with other publishers and independent. This is probably reflected in their bottom line; along with SF romance was one of the first genres to go digital and it is one of the genres to benefit the most from the self-publishing revolution as well as the rise of new independent digital publishers.
And given that the lawsuit concerning Harlequin underpaying digital royalties was recently revived by an appeals court, I wonder whether Torstar thought that Harlequin's potential liabilities outweighed its prospects.