News Corp to Buy Houghton Mifflin Harcourt Books & Media for $349M

Second major acquisition announced in the last week

News Corp is on a spending spree. On Monday, News Corp announced its plans to acquire the Books and Media division of Houghton Mifflin Harcourt for $349 million in cash. The deal is expected to close in News Corps fourth quarter of fiscal year 2021. The news comes just four days after News Corp shared its plans to acquire Investor’s Business Daily (IBD) for $275 million. IBD will operate as a standalone brand under Dow Jones.

Upon completion of this second acquisition, HMH Books & Media will be run by News Corp subsidiary HarperCollins Publishers. HarperCollins Publishers expects to see immediate cost savings totaling more than $20 million per year within the first two years. Savings will come from manufacturing, distribution and other cost efficiencies.

Popular backlist

HMH Books & Media will bring with it more than 7,000 titles including popular backlist titles including The Lord of the Rings trilogy and other work by J.R.R. Tolkien; 1984 and Animal Farm by George Orwell; and All the King’s Men by Robert Penn Warren. These backlist titles and others comprised 60% of HMH Books & Media revenue last year.

“Combining HMH Books & Media’s strong catalog with HarperCollins’s global platform will allow for increased investment in HMH Books & Media’s trade programs and we expect faster growth of the combined companies at a time of rapid growth in book consumption,” said Brian Murray, president and CEO of HarperCollins Publishers, in the March 29, 2021 announcement. “Joining HMH Books & Media’s media productions team and the HarperCollins Children’s global catalog will open up new animation and gaming opportunities as we look to accelerate the expansion of our IP across multiple formats.”

Other best-selling titles

HMH Books & Media, which had net sales of $191.7 million in 2020, also includes other popular media, including:

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  • Best sellers including Antoni in the Kitchen, Instant Pot Miracle, Wow in the World: The How and the Wow of the Human Body, Little Blue Truck’s Valentine and the Click series of middle grade graphic novels
  • Carmen Sandiego, the animated series, on Netflix
  • Children’s and young adult works, including Curious George, Martha Speaks, Five Little Monkeys, The Polar Express, The Little Prince and more
  • The Best American series, Betty Crocker cookbooks, Better Homes and Gardens cookbooks, the How to Cook Everything series and TheWhole30 franchise
  • A library of audiobooks

Reading is back!

“There is a resurgence in reading and listening to books, and we believe the brilliant HMH Books & Media backlist and first-rate frontlist have an enduring and increasing value. Timeless writing is a timely source of revenue and the potential to create highly profitable audio and video works flourishes with each passing digital day,” said Robert Thomson, chief executive of News Corp. “The HarperCollins collection will be bolstered for children and young adults, and authors around the world will have a larger platform for their creativity and ingenuity. It is crucial to expand in an era in which emerging monopolies threaten the creative marketplace, so we welcome J.R.R. Tolkien, Virginia Woolf, George Orwell and many, many other distinguished writers to HarperCollins.”

HarperCollins is one of the largest consumer book publishers in the world. In the quarter ended December 31, 2021, the publisher saw revenue growth in every category and total revenue increased by $102 million, or 23%. Digital sales grew by 15%, driven by ebook and audiobook sales.

Insider Take

In its second quarter of fiscal year 2021, ended December 31, 2020, News Corp had total revenue of $2.4 billion, including $544 million from its book publishing segment. Another $192 million would make a nice chunk of change for HarperCollins and NewsCorp. Considering the News Media segment was down 29% last year, and Book Publishing had the largest category of growth for News Corp, this looks like a solid move. This is a good way for them to grow. The big question is whether or not they will receive regulatory approval. HarperCollins already has a big chunk of the consumer publishing market.