Publishing News: March 24th, 1999
Mercer Study on Single Copy Sales
Reed Elsevier Profit Forecast Disappoints
Martin Maleska, Rejoins Veronis, Suhler
Bertelsmann Havas Deal is Off.
AAP: 1998 Book Sales Exceed $23Bill
US Book Store Sales: $13Bill
Amazon on Drugs
Golden Reprieve
Barnes & Noble Sales: $3Bill
Mercer Study on Single Copy Sales
Mercer Consulting recently announced preliminary findings from a study commissioned by the Magazine Publishers Association (www.magazine.org) . The study was a review of the single copy magazine channel and the potential role of scan-based trading in the retail market. The objective of the study was to determine the best way for the industry to take positive, concerted action to improve the efficiency and effectiveness of the single copy channel for all trading partners, and address the future role of scan-based trading. During the first phase, Mercer worked with retailers, wholesalers, national distributors, publishers and other industry players to identify opportunities for performance improvement in the retail sales of magazines. Mercer identified potential rewards equivalent to as much as $420 million per year or ten percent of retail sales based on their input, as well as lessons from other industries, and economic modeling of the supply chain. In support of the above, the MPA has adopted a set of cooperative standards and practices named COSMAR which will require changes and new approaches on the part of all trading partners: publishers, distributors and retailers. Mercer and the MPA will look to prototype their recommendations over the next few months.
Reed Elsevier Profit Forecast Disappoints
They don’t have a CEO, their merger with Wolters Kluwer failed and now profits announced for 1998 were 6% below last year and projected earnings for 1999 will be flat. Pre-tax profits fell to $1.26 billion in 1998 and these results were in line with the six percent drop the company forecast in December. Sterling's strength and Reed's heavy investment in adapting its core hard-copy publications for the Internet age were given as reasons for the poor results. Sales were $5.5Billion for 1998. This lack of strong growth, combined with a lack of news on Reed's search for a new chief executive, delivered a double blow to its shares, which fell sharply in London and Amsterdam, despite strong overall gains by both stock markets. The company did say that discussions with a candidate were in an advanced state however it is now two weeks after this announcement and they still have not made an announcement. Out going CEO, Nigel Stapleton declined to comment on how soon Reed will announce the results of its search, which was unveiled seven months ago. Other items of note; Reed spent an additional 15 million pounds on major initiatives in electronic publishing last year, taking the total to 80 million. The company posted ``pure'' Internet revenues of 10 million pounds, a 50 percent increase year on year.
Martin Maleska, Rejoins Veronis, Suhler
Veronis, Suhler & Associates announced that Martin E. Maleska, a senior publishing executive and investment banker who most recently served as President of Simon & Schuster's International and Business & Professional Group, has rejoined the firm as Advisor Managing Director. Mr. Maleska will be involved in all aspects of the firm's merchant banking activities which include investment banking and its private equity funds. The return to Veronis, Suhler is a homecoming for Mr. Maleska, who was a managing director at the firm from 1991-1995, concentrating on magazine, newspaper and book publishing transactions.
Bertelsmann Havas Deal is Off.
The proposed merger between Bertelsmann and Havas’s professional publishing operations is off. Apparently, neither side would concede to the other in terms of who’s operation was bigger. The companies continue to maintain close relations in French book clubs and online book retailing.
AAP: 1998 Book Sales Exceed $23Bill
The American Association of Publishers recently released their preliminary sales numbers for 1998. According the AAP numbers, retail book sales reached $23Bill. Give the last five years of declines or mediocre sales gains this was a remarkable sales increase of 6% over 1997. The biggest sales gains occurred in Adult paperback (+10%), Juvenile paperback (14%), and ElHi Texts (10%). In contrast to prior years, there were no categories which showed declining year on year sales.
US Book Store Sales: $13Bill
Bookstores sales reported in Publishers Weekly rose 2.6% to over $13Bill. Store sales measured against retail sales generally were only half the experienced gain for the sector.
Amazon on Drugs
Amazon.com purchased a 40% interest in the online drugstore, drugstore.com. Amazon made the investment a number of months ago and it recently came to light due to drugstore’s launch. Jeff Bezos, Amazon CEO declined to comment on other internet related investments Amazon may have made. Amazon appears to be actively proving the ‘mall’ internet business model.
Golden Reprieve
Golden Books, the beleaguered Children’s Book publisher where Richard Synder went to re-create Simon & Schuster, reached an accord with it’s Bankers on restructuring plan. Essentially, the deal recapitalizes the company with a loan from CIT group. Current management, which has been in turmoil over the past 12 months, will remain in place. Rumors at the end of last year had Disney purchasing Golden Books however nothing came of this. Golden holds long term licenses on a number of Disney characters.
Barnes & Noble Sales: $3Bill
Barnes & Noble sales hit $3Bill in fiscal 1999. Sales increased 8% over last year and sales from superstores accounted for 84% of total sales. Internet sales at barnesandnoble.com increased to $70.2MM. B&N reports that they will add up to 50 new superstores during 1999 however the company’s fiscal 2000 earnings forecast was low which helped reduce the stock price by $5 last week. Let’s not forget that Amazon is on a yearly run rate of $1Bill – what’s with the bricks and mortar?
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