The End of Trade Publishing As We Know It?

Publishing has gone through a great many upheavals over the past few decades. There has been an increasing consolidation of publishing houses into the Big 4, which used to be the Big 5, and before that Big 7, etc. And with Random House's merger with Penguin, there was speculation that soon there would only be the Big 1. But mergers and monopolies aren't the only trend on the horizon. The increasing acquisition of publishing houses by private equity firms is another disturbing development.

In an article posted in Publishers Weekly, Gary Gentel bemoans the demise of Houghton Mifflin. Gentel, who was president of the HMH trade division from 2007 to 2016, traces the trajectory of the purchase of Houghton Mifflin by Riverdeep Holdings, which then purchased Harcourt Education and created Houghton Mifflin Harcourt, which in turn led to the eventual cash purchase of Scholastic’s EdTech business by HMH, which created HMH Books and Media (Trade), which was then sold again. HMH, which doesn't really exist anymore as a publishing house, is now focused entirely on digital sales to grades K - 12.

So, why is this a problem? After all, mergers and acquisitions are not a new phenomenon. The problem, as many people in the publishing industry see it, is that publishing companies are increasingly being bought and sold ("flipped") by private equity firms, which are merely leveraging capital. Unlike publicly owned companies, private equity firms require a certain amount of money for entry, anywhere from $250 thousand to several million. These firms have absolutely no interest in publishing. As they buy publishers, including magazines and journals, they are simply stripping them down, selling them off, and drawing as much cash out of them as possible. And in the process they are destroying what publishing is, or rather what is once was, and should still be, which is a forum for ideas.

When the intellectual clarity of historians and philosophers, the creative imagination of novelists, the insights of poets and memoirists are no longer of interest to publishers, these things cease to be readily available to the general public. Unlike the production of shoes or cars, books are not mere physical objects: Books are ideas. Once publishers cease to have interest in what books contain, the ideas perish, because like everything else in the ephemeral world of the mind, ideas must be shared.

Related articles: Platinum Equity to buy McGraw Hill from Apollo for $4.5 billion

‘Valuations had shifted’: What a private equity acquisition means for legacy media

Bonnier Corp to Sell Its Biggest U.S. Magazines to Venture Equity Group

Hachette Book Group Will Acquire Workman Publishing for $240 Million

Image by Christine Engelhardt from Pixabay

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Saluting HMH, a Storied Trade Publisher by Gary Gentel, June 18, 2021

I came to the trade division at Houghton Mifflin in fall 2003 as senior v-p of trade sales, at the tail end of the Lord of the Rings movie trilogy. The French conglomerate Vivendi had purchased Houghton a few years earlier, taken it private, and had sold it to a consortium of bankers and investors at a huge loss. Vivendi was the first, but it wouldn’t be the last disastrous foreign investor in what had historically been the highly profitable U.S. education business. Meanwhile, the trade division was coming off an outstanding three-year run thanks to Tolkien—perhaps the best in its long and storied history.

The longevity of HM (founded in 1832) isn’t unique among publishing houses, but it was certainly a source of pride inside the division and within the larger corporation. There was a deep respect for the history, close attention to the present, and a vision for the future. In other words, it was a company that knew what it was about: educating and entertaining children and adults. But dark clouds were forming on the horizon.

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