Black Wednesday for Publishers

Some interesting points from a recent NY Times article:

“. . . never in all my years as a bookseller have I seen a retail climate as poor as the one we are in.” (Leonard S. Riggio, chairman and largest shareholder of Barnes & Noble)

• Simon & Schuster: 35 people laid off
• Simon & Schuster: president of children's division resigned
• Houghton Mifflin Harcourt: publisher of adult division resigned
• Houghton Mifflin: further layoffs
• Thomas Nelson: 10% cut in staff
• Penguin Group: freeze on raises
• Harper Collins: delay on raises
• Random House: resignation of heads of two of its largest groups
• Doubleday: layoff of 10% of its staff

Along with the rest of the economy, the publishing industry is taking punches (see the entire NY Times article below).

I guess it shouldn't come as a complete surprise but I was thinking that the recession might mean that people would be looking for cheaper forms of entertainment: like reading.

For the price of one movie admission, a person could purchase a novel and get hours of entertainment--without driving anywhere or being tempted by the popcorn and drink combo that doubles the cost of the movie night.

I wonder if the federal government would be interested in shoveling some $$ the way of publishers?

(from NY Times, December 3, 2008)

PUBLISHERS ANNOUNCE STAFF CUTS
In a day of especially grim news for the book business, Random House, the world’s largest publisher of consumer books, announced a sweeping reorganization aimed at trimming costs, while Simon & Schuster laid off 35 people.

The moves signaled just how bad sales have become in bookstores and followed the news this week that the publisher of the adult division of Houghton Mifflin Harcourt, the house that represents authors including Philip Roth and José Saramago, had resigned, presumably in protest of a temporary freeze on the acquisition of new books.

Industry insiders were already calling it “Black Wednesday” as news trickled out about further layoffs at Houghton Mifflin, a cut of 10 percent of the staff at Thomas Nelson, the world’s largest publisher of English-language Bibles, a freeze on raises at the Penguin Group unit of Pearson and a delay of pay increases at HarperCollins, the books division of the News Corporation.

The news at Random House, which included the resignations of the heads of two of its largest groups, followed months of speculation about the company. Ever since Bertelsmann, the German media conglomerate that owns the publishing group, appointed Markus Dohle, formerly head of the company’s printing unit, to head Random House in May, most people assumed he would consolidate some imprints and make staffing changes.

In a memorandum to the staff on Wednesday, Mr. Dohle said that Irwyn Applebaum, publisher of the Bantam Dell Publishing Group, and Stephen Rubin, publisher of the Doubleday Publishing Group, had stepped down. In a separate message, Mr. Dohle said that he was in discussions with Mr. Rubin about “creating a new role for him at Random House.”

Bantam Dell publishes authors including Dean Koontz and Danielle Steel. Doubleday’s authors include John Grisham and Dan Brown.

Mr. Dohle did not announce any further layoffs on Wednesday. But in an interview, a spokeswoman, Carol Schneider, said publishers would be reviewing their staffs. “There may be some difficult choices that they’re going to have to make down the road,” she said.

In a message to the Simon & Schuster staff, Carolyn K. Reidy, the president and chief executive, said the 35 layoffs at the company resulted from “an unavoidable acknowledgment of the current bookselling marketplace.” Rick Richter, president of the Simon & Schuster Children’s Publishing Division, also left the company. Ms. Reidy said Mr. Richter resigned to “explore other opportunities in publishing.”

Simon & Schuster, publisher of authors including Stephen King and Bob Woodward, is the books division of the CBS Corporation.

The shakeout in the industry comes during what publishers and booksellers have described as the worst retailing environment in memory. Recently, Leonard S. Riggio, chairman and largest shareholder of Barnes & Noble, predicted a dreadful holiday shopping season and wrote in an internal memorandum that “never in all my years as a bookseller have I seen a retail climate as poor as the one we are in.”

The deterioration in book sales appears to have come late in the year. According to Nielsen BookScan, which tracks about 70 percent of retail sales, sales for the year are actually up slightly. But several publishers said that sales in October and November had weakened drastically.

The industry was bracing for more layoffs. Last month, John Sargent, chief executive of Macmillan, whose publishing houses include Farrar, Straus and Giroux and St. Martin’s Press, said in a companywide meeting that he could not guarantee that everyone would have a job going forward. Mr. Sargent declined to comment. Macmillan is part of the Georg von Holtzbrinck publishing group.

“During good times, you can better absorb a variety of lines not doing well than you can when the economy is in this kind of condition,” Robert Gottlieb, chairman of the literary agency Trident Media, said.

At Random House, Mr. Dohle announced changes that elevated the roles of Sonny Mehta, head of the Knopf Publishing Group; Gina Centrello, head of the so-called Little Random unit; and Jenny Frost, president of the Crown Publishing Group, publisher of two memoirs by President-elect Barack Obama.

Mr. Mehta’s empire will expand to include the Doubleday and Nan A. Talese imprints, merging authors like Margaret Atwood and Jonathan Lethem with Knopf’s writers, like John Updike and Toni Morrison.

Ms. Centrello, who oversees the Random House Publishing Group, which includes the Ballantine division, will assume Bantam Dell, the Dial Press and Doubleday’s Spiegel & Grau. Ms. Frost will take over imprints including Doubleday Business, Doubleday Religion and Broadway Books.

Many people in the industry were not surprised that Mr. Applebaum was resigning from Bantam, considered Random House’s weak link. A significant part of its business is the mass market segment, the smaller paperback format of thrillers and romances, whose sales have declined over several years.

But industry veterans were surprised that Mr. Rubin, who is well regarded in the business, was being removed from his post and that the Doubleday Group was being dismantled, despite a particularly bad year.

Dan Brown, author of “The Da Vinci Code,” failed to deliver his next novel, originally set for release in 2005. Jon Krakauer, author of the adventure hits “Into the Wild” and “Into Thin Air,” withdrew his book about Pat Tillman, the former football star killed in Afghanistan, originally scheduled for an October release.

To top it off, “The Gargoyle,” a first novel for which Doubleday reportedly paid $1.25 million, flopped, selling 34,000 copies in hardcover, according to Nielsen BookScan. In October, Doubleday laid off 10 percent of its staff.