Rupert Murdoch's publishing empire, News Corp (NWSA), announced on Monday that it has agreed to buy the Books & Media segment of Houghton Mifflin Harcourt (HMH Books & Media).
The business will be folded into its current book publishing operation HarperCollins Publishers, a News Corp subsidiary.
The sale is worth $349m (£252.2m) in cash, and the acquisition is subject to customary closing conditions, including regulatory approvals.
HMH Books & Media is home to one of the most extensive and successful backlists (new iterations of previously published titles) in the publishing industry, including works from George Orwell, the Lord of the Rings trilogy and other titles by JRR Tolkein. HarperCollins currently has rights to Tolkien’s works in the British Commonwealth.
News Corp said that backlists have proven to be a sustainable and growing source of revenues, high margins and cash flow for publishers, particularly evergreen properties with broad, enduring and global appeal. The imprint has a history of strong profitability.
In 2020, HMH Books & Media had strong growth with net sales of $191.7m, and adjusted EBITDA of $26.6m, based on public filings. Over 60% of HMH Books & Media revenues were generated by its backlist.
News Corp said that HMH Books & Media also has a first-rate frontlist in the lifestyle and children's segments with recent best-sellers like 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.
HarperCollins expects to realise immediate cost savings, accumulating to more than $20m annually within two years, including manufacturing, distribution and other cost efficiencies due to the sale.
Robert Thomson, CEO of News Corp said: “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.”
“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.”
The deal is the latest consolidation in the publishing world and comes following a failed attempt by News Corp to acquire Simon & Schuster last year. The publisher was bought by rival Penguin Random House from ViacomCBS for £2.18bn and is currently undergoing scrutiny from competition regulators in the UK.