After a difficult third quarter, Houghton Mifflin Harcourt plans "to explore the potential sale" of its trade publishing division, HMH Books & Media, and has hired Centerview Partners, an investment banking and private equity firm, to handle that.
At the same time, HMH Books & Media president Ellen Archer has decided to leave her position, and the company thanked her for her contributions. Ed Spade, most recently v-p, sales and national accounts and head of HMH Audio, is serving as interim president.
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| Ellen Archer | |
In the quarter, ended September 30, HMH, primarily a publisher of textbooks, education and learning materials, was deeply affected by the pandemic, which led to reduced sales and textbook adoptions. Revenue for the company fell 31.7%, to $387 million, and the company had a net loss of $12.5 million, compared to a net gain of $69.3 million in the same quarter a year earlier.
Ironically, considering the potential sale, in the quarter the education part of the company had a sales loss of $187 million while trade division sales rose 15.8%, or $7.6 million, to $55.7 million. HMH attributed the trade sales gain "primarily to an increase in licensing revenue of $7 million, which includes $4 million from the Carmen Sandiego series on Netflix." For the first nine months of the year, HMH Books & Media sales rose 1%, to $129.2 million. The company noted that the trade division's sales were affected by "the closure of bookstores during the Covid-19 pandemic and the corresponding delay in releases of new frontlist titles."
In early October, Houghton Mifflin Harcourt let go 22% of its employees, none of whom were in the trade division. The potential sale of the trade division would, the company said, "reduce debt and build on the company's October 1 restructuring to align its cost structure to its digital-first, connected strategy, and create a pure-play learning technology company."
Concerning the trade division, Jack Lynch, president & CEO, Houghton Mifflin Harcourt, commented: "We are extremely proud of the HMH Books & Media team--the business has demonstrated continued success and resilience, particularly through this challenging year. Our decision to explore a potential sale is strategic in nature, as we deepen our focus on a digital first, connected approach to serving K-12 students and teachers. HMH Books & Media continues to be a leader and innovator, carrying forth a long literary legacy while also pushing boundaries and expanding formats. The team will remain focused on acquiring competitive and unique projects and bringing award-winning books to readers. We will look for a potential owner who recognizes the value of this business and will honor the talent, heritage and innovation of the HMH Books & Media team.
"I have great confidence in Ed Spade and his ability to lead the team forward in the key role of interim president. He has worked closely with our editors, beloved authors and creators to bring bestselling books to market, and he brings extensive industry knowledge to the table, having managed the sales and distribution of titles for HMH and other publishers. His experiences in wholesale and deep understanding of the broad retail market, online sales, supply chain, and the in-house digital and print publishing processes make him well-suited to this new role."
Ellen Archer was named president of what was then called HMH Trade Publishing five years ago. Earlier she spent 15 years at the Disney ABC Television Group, and for five years was president and publisher of Hyperion Books, then a division of the Walt Disney Company. She also consulted for start-ups and nonprofits, providing strategic advice in content development, marketing and business planning.