Is the Publishing Industry in Crisis?

Let's do the math.

Years ago, when I was VP of Publicity at Atria, the imprint published a few intuitives and psychics. A peculiar perk for me was that I was given free sessions with them, which once led me to one of their apartments in Santa Monica and to my alleged past lives (this might be a story for Jane Pratt). Someone else who had sessions with these psychics and intuitives was the legendary Carolyn Reidy, then CEO of Simon & Schuster. I had the utmost respect for Carolyn, so it amused me to learn she sometimes relied on these individuals for business guidance. All this is to say that even CEOs don’t know what the future holds for their business, but they certainly want to know, and that is a good segue into this week’s newsletter.

Last week, News Corp released its earnings report for Q1 2026. As you probably know, HarperCollins is owned by News Corp, so their Q1 results were included in the investor call. If one were to glance at publishing headlines, one would see that revenue at HarperCollins decreased by 2%, primarily due to slow orders from readers and retailers.

Publishers Lunch noted that “A number of publishers have mentioned on background seeing an unexpected pullback in inventory by the etailer to a leaner supply-on-hand in July, August, and September (unlike previous inventory changes, which were explained in advance and aimed at driving efficiency).” This aligns with the part of the earnings report where “slow orders from retailers” are mentioned. It doesn’t surprise me that Amazon cut back on orders, as this has been happening for a while—you may not have noticed. Anecdotally, I can tell you that Amazon was slowing down on orders three years ago at my last in-house job. They don’t want excess product in the warehouses, and they have enough sales data to make informed decisions about what quantity of books to stock. It is really not that different from what Barnes & Noble has been doing.

Here is an excerpt from News Corp’s investor call transcript:

“In total, digital sales represented 23% of consumer revenues compared to 25% in the prior year. This quarter, the backlist contributed 65% of consumer revenues, up from 64% last year.”

Sixty-five percent of HarperCollins’ Q1 sales come from backlist titles. I focus on this statistic because it reveals that more people are purchasing older books than new releases, which highlights a significant issue in publishing: the industry continues to release too many new books while people are still buying titles from two years ago. The image that comes to mind when I think about this is a multi-car pileup on a freeway. If you don’t stop the cars, they’ll keep piling up. The more books that are published, the more they pile up.

I understand that every publisher’s backlist is its primary source of income. Frontlist titles exist because of the backlist, and the goal is for some of a publisher’s frontlist titles to become part of the backlist eventually. That is a positive financial outcome. However, I do wonder what the conversion rate is for each of the Big Five companies right now. When examining book publishing balance sheets, the backlist is a crucial line item. What concerns me is the gap between the number of frontlist titles published and their sales. If frontlist sales decline, a publisher’s backlist could start to weaken. If the backlist weakens, it could lead to problems.

More from News Corp’s investor call:

“At Book Publishing, as expected, very difficult prior year comparisons weighed on the results this quarter. The quarter was impacted by both timing of ordering and softer U.S. market conditions albeit trends improved in the recent weeks. Segment revenue of $534 million declined 2%, while segment EBITDA of $58 million declined $23 million or 28%, as mentioned earlier, EBITDA was negatively impacted by a $13 million receivable write-off relating to the expected closure of Baker & Taylor, a distributor focused predominantly on the library channel.”

What concerns me here is HarperCollins’ EBITA (Earnings Before Interest, Taxes, Depreciation, and Amortization). A 28% decrease in EBITA means lower revenue compared to higher operating costs (I am simplifying this). Here is News Corp’s balance sheet, which adds context—anything in parentheses=negative:

You don’t need an MBA to see that book publishing is a financial pain point for News Corp. Sure, a $13M write-off due to Baker & Taylor folding affected EBITA and revenue, but that isn’t the sole reason for a decrease of 28%. For comparison, the New York Post’s EBITA grew by 67%. Translation: The Post is doing just fine, and HarperCollins is not. Granted, the outlook for HarperCollins’ next fiscal quarter is cautiously optimistic, but unless they have some blockbuster titles, they might be looking at more losses.

HarperCollins isn’t the only publisher experiencing choppy waters. Here is what Publishers Weekly had to say about PRH’s earnings for the first half of 2025:

Macroeconomic challenges, including rising costs and uncertainly caused by Trump administration tariffs, limited sales growth at Penguin Random House in the first half of 2025 to a 2.1% increase. Revenue rose to €2.3 billion ($2.6 billion), but operating EBITDA (earnings before interest, taxes, depreciation, and amortization) fell 12%, to €255 million ($297.5 million), primarily due “to lower revenues and growth-related expenses in the core U.S business,” said parent company Bertelsmann.

You may wonder how there can be an increase in revenue and a decrease in EBITA. The simplest way I can explain this is to say that PRH is not efficiently converting revenue to profit, or they are outspending what they are making. Higher operating costs, which negatively impact EBITA, include items such as supply chain, salaries, and raw materials. Tariffs can only explain so much because not all books are printed in China. Once again, I think this is a “pile-up” situation where the number of books published far outpaces consumer spending. Also: backlist titles.

Since a private equity firm owns Simon & Schuster, it is not required to release its earnings publicly. Lucky them, but we won’t know what’s happening there, which would help assess the industry’s health.

So, is the publishing industry in crisis? That’s a tricky question to answer when considering HarperCollins and PRH, as they are owned by large conglomerates that operate in other profitable segments. For example, Bertelsmann owns BMG, which has made significant investments in music catalogs that it can and does license. News Corp owns Fox. I don’t think I need to tell you how well it does for them.

When I see stories like the one about Mango Publishing ceasing operations, the first thing that comes to mind is that the owners probably took out high-interest loans and were unable to make enough profit to repay them, pay authors, and cover payroll. Remember, publishing is a business, so if you don’t have big books or a robust backlist that makes a profit, you are in for a tough road ahead. Publishers owned by conglomerates have layers of protection; however, if things continue in a negative direction, we may see an edict to cut more costs from each publisher’s parent company.

I don’t think the publishing industry is currently in crisis, but it is getting close. This holiday season will provide a more comprehensive picture of consumer spending. I don’t think it will be pretty, but I also think the fact that people lined up in the wee hours to buy a Starbucks glass teddy bear cup competes with the narrative of a bad economy (by the way, those cups are being resold on eBay for $500).

The most challenging aspect of book publishing is the uncertainty. Setting aside repeat bestselling authors, we don’t know what books will break out. Similarly, people like me who do publicity and marketing for books don’t know who will pay attention to a particular title. What is certain is that not enough people are reading, and that’s been a publishing problem for as long as I can remember. Something I loved about Italy was how much they still value the arts, including books, music, painting, and paper-making. Yes, there are those of us who value those things in the United States, but this country is relatively young compared to ancient Rome. We still have a lot of catching up to do. I hope it happens.

END NOTES:

What I’m Reading: I re-read Edgar Allen Poe’s “The Tell-Tale Heart” for the 100th time (it was for grad school).

What I’m Watching: “I Love L.A.” probably has the most annoying characters on TV, yet I can’t stop watching. I am way too old for this show.

What I’m Listening to: I just listened to the Smartless episode where they interviewed my boyfriend, Oscar Isaac. He’s so charming!