With general bafflement continuing over Houghton Mifflin Harcourt’s willingness to admit out loud that they have a freeze on buying new books, the NYT speaks to Jeremy Dickens, president of Education Media and Publishing Group, the private equity company that owns the trade publisher. “He denied that the company was for sale, but said, ‘If there’s a transaction that makes sense for all of our stakeholders, we’ll consider it.'” And “he said that the company had received inquiries from other trade publishers interested in acquiring Houghton.”
On the freeze, Dickens said they wanted to be “extremely prudent about the way that we allocate our capital and where we make our investment decisions.” He added, “We have plenty of titles in the pipeline that will be coming out next year and we will continue to evaluate opportunities if and when we decide to lift the freeze.” That “if” will cause some additional concern….
The buyers took on massive debt to swallow Houghton Mifflin and then Harcourt, back when credit was at least cheap and freely available, and they now have “about $7 billion in debt” with annual debt service of “about $500 million.” DIckens says they have no problem covering the payments, but are not “allocating as much capital” to trade publishing, which is a small part of the company.
Meanwhile, yesterday agent Kristin Nelson, posting on her blog, said: “I did get a chance to talk to an Editorial Director at Houghton Mifflin Harcourt Children’s. She mentioned that the hold [on acquisitions] did not apply to the children’s division and that she had acquired something just yesterday.”
The article also paints a contrast between houses cutting back, like HMH, and publishers having strong years, like Hachette Book Group (where a string of hits is worth even more to the parent company now that the euro is somewhat weaker against the dollar.) And there is the suggestion that commercial hits are an essential part of success today: “One of Houghton Mifflin Harcourt’s best authors, Mr. Roth, is a literary lion who is frequently rumored to be on the short list for the Nobel Prize in Literature. Each of his last three novels have sold fewer than 75,000 copies in hardcover, according to Nielsen BookScan, which reports about 70 percent of sales. David Baldacci, meanwhile, a stalwart author in Grand Central’s stable, has already sold 114,000 hardcover copies of “Divine Justice,” his latest novel, just published this month.”
Separately, the Observer undertakes a comprehensive survey of cutbacks on lunchtime expenses in publishing. HarperCollins and Random House are eating less expensively. (At RH, “some supervisors were recently given guidelines indicating how much employees should tip and which restaurants near the company’s midtown headquarters are thrifty enough to do business in. While the guidelines were advisory, the message was clear.”)
But others, from Marjorie Braman to Bob Weil, cite opportunities hatched over meals. Esther Newberg at ICM is willing to “alternate” in picking up checks, and Ira Silverberg paid for lunch on Monday with an HMH editor who wanted to cancel after the company “slashed” T&E. Oops.