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Revenues Down at S&S, Random Penguin House

3865517102_332bf955a2[1]As more and more reports come in, it looks like 2014 was not a good year for the major publishers. Over the past couple weeks, both Simon and Schuster and Pearson have published annual reports and neither had good news to share.

From PW:

Revenue and profits fell in 2014 at Simon & Schuster, parent company CBS reported. Sales declined 3.8%, to $778 million, while operating profit dropped 5.6%, to $101 million.

The publisher, which saw sales and earnings rise in 2013, closed 2014 on a soft note with sales down 4.4% in the fourth quarter, compared to the final period of 2013, and operating income down 30%.

One reason for the 2014 decline in revenue and earnings was also a drop in digital sales. E-books accounted for 23.2% of S&S sales last year, down from 24.4% in 2013. Total digital revenue, which includes downloadable audio, generated 26.4% of revenue, down from 27.1% in 2013.

S&S CEO Carolyn Reidy attributed the decline to a lack of hit releases in 2014 as compared to 2013. (And who knows, high ebook prices may have contributed.)

And earlier today Pearson reported similar disappointing earnings from their stake in PRH. There’s no news on digital revenues, but Pearson did report that:

Pearson reported 2014 earnings of £69 million, after taxes, from its 47% stake in Penguin Random House. This figure is down from £78 million in 2013. PRH’s 2014 earnings contribution was lower because of taxes. For the year Pearson reported total revenues of £4.8 billion and operating earnings of £720 million.

According to Pearson’s preliminary, unaudited 2014 financial report, Penguin Random House results benefited from strong performances in children’s publishing and a variety of million-copy bestselling film and TV tie-ins. Bertelsmann will report full Penguin Random House results at the end of March.

Penguin Random House is the single largest trade publisher in the US, and one of the larger conglomerates in the world. Is it just me, or does that make the £69 million in profits sound awfully small?

image by perpetualplum

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puzzled February 27, 2015 um 4:46 pm

The £69 is half the profits, further reduced by taxes.

Darryl February 28, 2015 um 4:20 am

Although they will blame everything else, I agree with you about higher ebook prices playing at least some role. I suspect that it is a very significant one.,

Cassie February 28, 2015 um 8:26 am

High ebook prices…
High VAT / Sales Tax…
Stupid unexplained $2 Amazon surcharge for some customers who are unlucky enough not to have been born in or migrated to the USA or some of those other lucky countries that aren’t being subjected to this unfair 'fee’…
Paperbacks/Hardbacks? Impractical in this day and age when most people live in expensive but teeny tiny spaces.
If all the big 5 publishers all disappeared tomorrow, doubt a lot of readers would actually care.

Smart Debut Author March 1, 2015 um 12:00 am

They wouldn’t even notice they were gone.

fjtorres February 28, 2015 um 10:42 am

No "jackpot" big sellers in 2014?
It might be the new normal:
It’s been a while since 50 Shades.
Most of the bigger sellers in the past few years have been movie-boosted.

2015 will tell…

Smart Debut Author February 28, 2015 um 11:53 pm

Well, however accurately or inaccurately the quarterly Author Earnings snapshots measure the market, at least they’ve been collected consistently every time. And every quarter they showed the Big Five’s share of the ebook market shrinking a little more, so I can’t say this is surprising at all.

Listening to Reidy cheer a slight uptick in print sales as good news to offset S&S’s declining digital sales is sort of like hearing Tower Records cheer a slight uptick in vinyl sales because no one wants to buy their $16.99 CDs. If I was a 2015 publishing CEO watching my digital sales decline, I wouldn’t be talking up a minor increase in toddler board-book sales… I’d be busy preparing for my next career.

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