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HarperCollins acquisition of Harlequin and what it means for readers

HarperCollins acquisition of Harlequin and what it means for readers

Let’s start out with gathering the information that has been put out there publicly. HarperCollins has acquired Harlequin Enterprises from Torstar for $455 million. Harlequin will be a division of HC (as opposed to the Random Penguin which was a merger). According to one report, Harlequin will remain in Toronto where there are 350 employees. None of the news reports identify what will happen to the New York based Harlequin offices and employees.  Part of Mira, HQN, and Teen Harlequin, and foreign rights divisions (among others) are located in New York.

Harlequin was initially acquired by Torstar in 1975 and Torstar has indicated that part of the proceeds will go toward its $158.5 million in debt. There is some suggestion that the remainder of Torstar will be sold yet this year.

I saw a number of people speculate that the sale of Harlequin had to do with Harlequin being in trouble financially and while Harlequin has seen decreasing profits in the recent years, it was still a healthy and profitable division of Torstar. The above article noted that Harlequin was the one bright star in the Torstar portfolio.

The Harlequin book publishing division of Torstar has long been a boon for the media company, which has struggled in recent years amid declining newspaper subscriptions and advertising sales, while adapting to a growing digital environment.

Torstar’s real issues were related to its newspaper side. This May 2013 article discusses Torstar’s troubling future in the digital age due to the decline of print ad sales. In November, Torstar had posted a $70.8 million loss in the third quarter.

Harlequin’s revenue started to decline in 2010. (There was a decline in 2008 but a booming year in 2009 corrected that.

  • 2009:  Revenue was $493.3 million. The annual report referred to Harlequin as “a real anchor” for Torstar.
  • 2010: Total revenue of $468 million  Collectively, Harlequin authors enjoyed a record
    high 257 weeks on the New York Times Bestseller Lists, up 10% over
  • 2011: Total revenue was $459 million, with revenue slightly down from 2010. Digital growth not offsetting declines in print revenue. Seven number 1 bestsellers. They digitized 5200 new and older titles.
  • 2012: Total revenue $426 million. Excluding the impact of  foreign exchange, revenue was down 6% from 2011 as growth in digital  revenues was insufficient to offset declines in print revenue.  49 titles on the NYT bestseller list.
  • 2013: Per the fourth quarter reports, book revenue was down $28.8 million in 2013 including a $4.1 million increase from the impact of foreign exchange.

Nearly every year, the decrease was attributable to decline in retail print and direct to consumer sales and while there was digital growth it did not offset print declines and soft sales in international segments. Europe was specifically identified.

Most of Harlequin’s print sales are in paperbacks–either trade or mass market. While trade has seen some declines, mass market print sales have plunged dramatically since 2006, the last year there was an increase in mm paperback sales. (I don’t have full  numbers for each year since the AAP stopped making that information available publicly).

  • 2007 – mass market sales are down 2.0% with total sales of $1.1 billion.
  • 2008 – mass market sales are down 3.0% with total sales of $1.1 billion.
  • 2009 - mass market sales are down 4.0% with total sales of $1.0 billion.
  • 2010 – mass market sales are with total sales of $673.6 million.
  • 2011 – mass market sales are down 40.9% with total sales of $545.1 million.
  • 2012 – mass market sales are down 12%.
  • 2013 – mass market sales are down  7.7%, to $373.1 million.

In summary, between 2007 and 2013, mass markets declined from $1.1 billion to $373.1 million. In contrast, ebook sales grew from nothing to be a quarter of trade publishing sales. This does not include the millions of self published copies sold in 2013.

Combining the e-book sales for the adult and children’s trade groups, total sales of the format fell 1.0% in 2013, to $1.47 billion. E-books’ share of the adult trade market rose to 26.6% of all sales of companies that report to AAP in that category compared to 25.9% in 2012. E-books’ accounted for 10.9% of children’s sales in 2012 compared to 13.9% in 2012.

In summary, we have a major part of the Harlequin enterprise seeing a major decline while an increase in competitors including digital publishers, digital imprints from mainstream publishers, and self publishing.

In the press release, HarperCollins CEO has suggested that the acquisition of Harlequin will assist in an increased global presence for HC books. It’s important to note the last part of the quote:

The Harlequin name and rich heritage will be preserved independently, with the aim to leverage capabilities to bring the book-reading public more choices. Harlequin’s business has grown internationally, and will give HarperCollins an immediate foothold in 11 new countries from which we can expand into dozens of foreign languages for authors who choose to work with us globally.

I added the bold for emphasis because it’s the perfect segue into how the acquisition affects readers. I said on Friday when I heard the news that I was dismayed and the reason for this dismay is that Harlequin has very reader friendly policies and HC not so much. Let’s look at a table, shall we?

Harlequin HarperCollins
Library Same low price, unlimited lends HarperCollins offers its complete ebook and audio catalog for library
lending. HarperCollins allows only 26
circulations after which libraries must repurchase a new copy.
Coupons Yes. No.
Discounts Yes, frequent discounting and sales Yes, frequent discounting and sales
Pricing Category books are priced under $5. Most titles retail $7.99 or above. Digital imprint books vary in pricing.
DRM None for Carina Press titles. Yes for Harlequin titles. Yes except for a select few sold through All Romance.
Reader to Reader lending Yes for Carina Press titles. No for other Harlequin titles. No.
Available worldwide Yes because generally all Harlequin contracts with authors were for worldwide distribution. No. Each contract with each author is different. Authors may choose to hold or sell rights in different countries. And even if they do sell world rights sometimes the publisher will sit on them and not push the book out into other regions. This is known as geographic restrictions.

There are some other intangibles. Harlequin has made a concerted effort to provide diverse content, offering Asian and African American protagonists. While having its own category line is problematic in some aspects, the Kimani categories have provided increased exposure to AA authors and protagonists. Harlequin in recent years has included multi ethnic characters outside the Kimani line.

Harlequin is also in a unique position in that it is one publisher that has sold direct to consumer successfully and because of that has a better understanding of readers. They were one of the first to digitize its backlist (2011) and make the frontlist available digitally (2007).  They believe in putting their content where the readers are including at nearly every retailer including small ones like All Romance and in libraries. While it is still a publisher, it’s a fairly reader connected one.

We don’t know how this acquisition will change for readers. It may not have any effect.  A year out from the Random / Penguin merger, it seems business as usual for those two entities. Perhaps we will say the same about the acquisition of Harlequin by HarperCollins. But I admit to being worried and I hope that my worries are irrational and that this acquisition will mean continued pro reader policies.

Friday News: Harlequin authors win some and lose some, Toronto Public Library releases proposed banning list, Free Comic Book Day is this Saturday, and win $1000 for deciphering margin notes

Friday News: Harlequin authors win some and lose some, Toronto Public...


Updated by Jane to add: This morning it was announced that News Corp. will buy Harlequin for close to a half billion dollars and that Harlequin will become a division of HarperCollins. The “Harlequin as a division of HC” is worrisome to me. When Penguin and Random House merged, each remained its own separate entity. With Harlequin as a division of HC, I think it is safe to say that several things are going to change. Harlequin has always been reader friendly, library friendly publisher. And it has, particularly in recent years, tried hard to push diverse characters into its mainstream lines. Honestly I feel a little dismayed about this.

Appeals Court: Book Publisher Must Face Self-Dealing Lawsuit – So it looks like the authors suing Harlequin are both winning and losing. The 2nd Circuit held that the subsidiary companies Harlequin established in the 1980s and 1990s were valid representatives of “the publisher” per the contractual agreement with authors. However, Judge Parker reversed the holding of the lower court in regard to the self-dealing claim, which relates to the 6 to 8 % Harlequin Enterprises paid to its subsidiaries (and therefore for distribution to the authors in the form of royalties) was far too low relative to the industry standard. Now the case goes back to the lower court for further proceedings.

The ruling could be a confidence boost for others bringing vertical integration claims. For example, The Walking Dead creator Frank Darabont sued last December in a New York court with a claim that AMC has cheated its profit participants by licensing the show to itself and “creating an unconscionably low license fee formula that had no regard for what AMC or any other network would pay in an arms’ length agreement for the right to broadcast such a comparable highly successful series.” –Hollywood Reporter

Nintendo Forgoes An E3 Press Conference Again, Brings ‘Smash Bros.’ To… Ever Wondered How Nancy Grace Comes Up With Her ‘Infamous And Wacky’ H… Someone Asked The Toronto Public Library To Remove ‘Hop On Pop’ Because It Promotes Violence Against Dads – The Toronto Public Library released its top seven books that were the subject of requests for banning within the last year, and the Dr. Seuss classic Hop on Pop made the list for promoting violence against fathers. Sometimes you have to wonder if this kind of thing is a joke, or whether someone really believed that Dr. Seuss was somehow promoting patricide. These kinds of requests illustrate the danger of banning, but they also have to give us pause around any assumptions we might have about universal textual interpretation.

As for the other titles that received complaints, Bill O’Reilly’s Killing Kennedy was accused of containing “falsehoods because it concludes Kennedy was killed by Oswald along”; A Kiss Remembered was deemed “obscene” because it “offends current societal morality”; Complete Hindi “contains inaccuracies and states that Hindi and Urdu are paired languages”; Flesh House is “shocking and disturbing”; the children’s book Lizzy’s Lion is “violent and disturbing”; and in my personal favorite complaint that I wholeheartedly agree with, the DVD copy of Adam Sandler’s That’s My Boy should be removed because it “shows sick and illegal behaviour and depicts it as humorous.” –UPROXX

What is Free Comic Book Day? – Free Comic Book Day occurs the first Saturday in May, and involves comic book shops around the world giving away free copies of volumes as a way of promoting the genre, its creators, and its commercial retailers. Apparently authors appear at some of the stores, depending on location. A full list of participating stores can be found on the website. –Free Comic Book Day

Decipher These Mysterious Margin Notes and Win $1000 – When someone donated a rare 1504 copy of Homer’s Odyssey to the University of Chicago Library, they did so wondering about two pages of margin notes in the text that have yet to be deciphered. So the owner is now offering a financial prize in order to incentivize discovery of the words’ meaning. More details can be found at the University website here.

What do they say? Why are they there? The person who donated the book to the library has offered a prize of $1000 “to the first person who identifies the script, provides evidence to support the conclusion, and executes a translation of selected portions of the mysterious marginalia.” The donor thinks it may be a form of French shorthand, but has no evidence for this. The notes interact strongly with the text, underlining and bracketing the specific parts they comment on. The text is in Greek, by the way, so that may make your deciphering a little more difficult. –Mental Floss