A first. I ain't got nothin' to say. Bad dreams, planes crashin' around the corner. Ugh. Now that I've lifted your spirits, on to the news...

My blog was gonna be on the bailout(s) and how I'm prayin' for Mr. Obama, and I'll touch on those things.

I also took a whopping 30 minutes to do nothing, and in that time, I wrote new lyrics to the theme song for the TV series, Gilligan's Island, entitled "Ode to Obama." It's kinda funny. Whaddya want for 30 minutes? I covered the song at the beginning of the series, and the verse at the end.

Plus... The Illinois political machine is in full swing. The Gov. of Illinois just got arrested by the Feds for trying to sell Mr. Obama's vacant Senate seat, and he has ties to Rezko, who has ties to ... never mind. I have to write about that.

Patriotic conservatives welcome-patriotic liberals also welcome. I'm an equal opportunity Rabid Republican.

Delay in Pay

HarperCollins "plans to delay pay increases until after July 1, 2009 ... a response to the U.S. recession, according to spokesperson Erin Crum, Bloomberg reports. "HarperCollins hasn't decided whether to eliminate jobs, she said."
Bloomberg

"Last month, John Sargent, chief executive of Macmillan, whose publishing houses include Farrar, Straus and Giroux and St. Martin's Press, said in a companywide meeting that he could not guarantee that everyone would have a job going forward. Mr. Sargent declined to comment."

- Pearson has a companywide freeze on nearly all raises, which includes Penguin.

- Bowker announced internally a restructuring in "a couple of our operating units, including the transition of key responsibilities to our development team in the Netherlands." As a result, according to ceo Annie Callanan, "this has resulted in the elimination of 13 positions in the US." She says they are "shifting more of our product management, training and IT development resources on our Search & Discovery services to our [Dutch] Medialab operation."
 
Callanan emphasizes that the company overall is expanding, not contracting: "Bowker is closing out another strong year of growth in 2008 and our payroll is actually increasing into 2009."

- Among the errors in newspaper coverage of yesterday's Random House changes (in addition to continuing accounts of Steve Rubin's departure), bear in mind that the new RH organization has four divisions, not three. The sizable Random House Children's remains a separate unit under Chip Gibson. Among the errors in our own coverage yesterday was Rick Richter's starting point at S&S. He joined the company in 1996, for his first of two stints running the Children's division.

by Jim Milliot -- Publishers Weekly

With Random House CEO Markus Dohle finally laying out the framework for the new Random House, the job of integrating the company's different divisions into the three remaining groups will fall to Gina Centrello (president of Random House Publishing Group), Sonny Mehta (president of the newly named Knopf Doubleday Publishing Group) and Jenny Frost (president of the Crown Publishing Group). According to spokesperson Carol Scheinder, the three have been giving no formulas or quotas to meet and are free to meld the divisions as they see fit. Schneider acknowledged that the consolidation could mean layoffs and a reduction in title count, and said that if layoffs occur they will be done "as quickly and carefully as possible." Schneider added that there are no plans to cancel or postpone any titles.

Echoing what Dohle wrote in his letter, Schneider said the consolidation is seen as a way to make it easier for the company to set priorities and to more quickly respond to changes in the market. She said the imprints of Bantam Dell and Doubleday were dispersed based on affinities with the other groups, noting that it made the most sense to move the mass-market operations of Bantam and Dell into Random House which already had its own mass market division in Ballantine. Similarly, moving Doubleday's business imprint to Crown formed a stronger business publishing unit.

In his letter, Dohle noted that the new publishing groups will continue to bid independently in auctions, but that he was looking for a more collaborative effort among the publishing, marketing and sales departments so "we can sharpen our priorities, market our books more effectively, and respond more quickly and directly to a constantly changing marketplace."

Bertram's Sale Imminent?

Michael Neil's latest quote on Bertram's: "We are up for sale and a sale agreement is imminent. We are confident it will be sorted by the end of the week." Norwich paper

By Lynn Andriani -- Publishers Weekly

Penguin Group chairman and CEO John Makinson sent a memo to all employees Tuesday, a year-end summary that had some positive remarks but was largely somber. Among Makinson's announcements: the company will not give pay raises to anyone earning $50,000 or £30,000 or more (or the equivalent in another currency) in the new year.

"This is the most challenging economic environment that any of us has ever experienced,&#xu201D; Makinson said, and he acknowledged the grim situations occurring at many of Penguin's competitors, including layoffs, and freezes on hiring, pensions and new book acquisitions. He was hopeful that holding off on pay increases for the next year would help Penguin avoid those drastic measures. However, Makinson said, "I cannot of course guarantee that there will be no job losses in Penguin in 2009. In this financial climate that would be plain foolhardy.&#xu201D; Makinson did not propose a recruitment freeze but said Penguin will not be hiring "unless it is absolutely essential.&#xu201D; The restriction on pay raises will apply to every Pearson operating company.

There were some positive remarks as well. "We are a strong and successful company, and right now we're the envy of the industry,&#xu201D; he said. "I continue to believe that we'll have every reason to take pride in our achievements when we announce our 2008 results next March.&#xu201D;

Makinson advised employees to "expect, and plan for, the unexpected in 2009 and possibly beyond.&#xu201D;

The Next Domino: Layoffs at S&S

Simon & Schuster has "enacted a reduction in staff in which 35 positions across the company were eliminated, from areas including our publishing divisions and international, operations and sales," according to a memo from ceo Carolyn Reidy.

Despite having "literally examined our budget line-by-line to find those areas large and small where we might further economize," Reidy says "today's action is an unavoidable acknowledgment of the current bookselling marketplace and what may very well be a prolonged period of economic instability. In light of this uncertainty, we must responsibly position ourselves for challenges both near term and long."

Richter to Leave S&S; The Other Applebaum Stays

Simon & Schuster Children's president Rick Richter has resigned "to explore other opportunities in publishing," leaving December 5. He has run the unit since 2003, and has been with Simon & Schuster since 1996 (when he also ran the children's unit before switching over to sales and distribution). CEO Carolyn Reidy notes that "under his leadership, Children's division revenues have nearly doubled, and the division has grown to become an industry-leading full-service publishing enterprise." She underscores that "children's publishing remains an important and vital part of Simon & Schuster's overall publishing portfolio" and indicateDennis Eulau will "work with the children's division on day-to-day operational matters" on an interim basis while she finds a successor.

Meanwhile, Carol Schneider at Random House advises that "there's been no change" in Stuart Applebaum's position at Random House. "Because this news involves the departure of his brother and longtime colleague, he decided that he would not take press calls at this time and I am standing in for him."

Dismantling of HMH Continues with Firings

Galleycat reports that Ann Patty says she has been "fired" along with "a lot" of other employees at Harcourt Houghton Mifflin, adding to the community's sense that the parent company has simply given up on the trade line. Place your takeover bids now.

By Rachel Deahl -- Publishers Weekly

The bad news, it seems, is not over. While the industry was rocked yesterday by a steady stream of announcements about major changes--35 jobs cut at Simon & Schuster, 54 at Thomas Nelson and the reorganization of Random House--HMH was quietly making cuts of its own. 

In a statement from an HMH spokesperson, it was confirmed that more cuts are being made at the trade and reference group, although no figures were disclosed. PW has learned that at least eight staffers have been laid off, including several in the children's division, including Clarion editor Marcia Leonard. A number of sources confirmed that among those let go on the adult side were executive editor Ann Patty, senior editor Anjali Singh and Harcourt fixture, senior editor Drenka Willen.    

The cuts at the trade and reference group are part of an overall streamlining at the company that includes the reorganization of the much larger k-12 organization. In mid-November, HMH announced that it was combining five standalone companies, including those acquired in HM's purchase of Harcourt, into a single unified unit. Those divisions include School Publishers, Holt McDougal, Supplemental Publishers, Heinemann, and International Publishers. In his statement issued today, the spokesperson said HMH is now moving ahead with the integration, a process that will include the elimination of some positions "even as new roles are created." The statement added that "in light of the challenging conditions worldwide, the company has taken a hard look at its business and is making changes in some of its other operations to lower expenses."

HMH Speaks: "Streamlining" Underway, with "Reduction of Some [Hundreds of?] Positions"

Houghton Mifflin Harcourt confirmed yesterday "it is moving forward with the planned combination of various of its businesses into a new K-12 organization comprised of School Publishers, Holt McDougal, Supplemental Publishers, Heinemann, HMH Learning Technology and International Publishers. These businesses were brought together with the acquisition of Harcourt by Houghton Mifflin in December 2007, and the integration process has been underway since that time." They note that "the streamlining of the business will result in the elimination of some positions, even as new roles are created that will let the company serve educators and students in new and unique ways."

Following the release of the company's statement and an internal memo from ceo Tony Lucki, the WSJ says that "at least several hundred of the company's 5,300 full-time employees are expected to lose their jobs, according to a person familiar with the situation."

The new organizational structure "will have financial benefits for the company, which, in turn will help it weather the impacts of the current economic crisis.  In light of the challenging conditions worldwide, the company has taken a hard look at its business and is making changes in some of its other operations to lower expenses. These actions are consistent with those occurring within other companies across a full spectrum of businesses, and include the reduction of some positions in the company's Trade and Reference and Riverside Publishing divisions."

The statement adds that "the company is proceeding carefully and thoughtfully to assure that it is making the best, most productive use of its resources. Overall, Houghton Mifflin Harcourt anticipates that the changes being announced will better position the company to realize its long-term strategic objectives while taking into account the current economic environment."

Separately, spokesman Josef Blumenfeld tells us that Houghton Mifflin Harcourt editor-in-chief Andrea Schulz "will manage the adult editorial group." She now reports to HMH trade and reference president Gary Gentel. Blumenfeld declined to indicate if this is an interim or standing arrangement.

Trying to Keep Some Perspective

There has been a lot of financial news to track and there is no question that it's been a grim week that's part of a grim year. Staring at a computer screen all day and surveying mainstream media coverage, blogs, and more, we continue to ruminate on how overcovered (HMH's freeze/freeze-lite/not a freeze; 16 layoffs at Doubleday or even divisional changes at Random House) and undercovered (more significant shedding of jobs at Nelson and Scholastic; British supply chain interruptions) individual stories become. Looking at the year, here are some informal thoughts on the bigger undercovered stories.

Job Layoffs
The biggest layoffs have had the least coverage. Among them:

Scholastic (a company with over $2 billion in annual sales) eliminated approximately 110 positions through early retirement packages as part of a broad cost-cutting program.

Thomas Nelson (valued at $473 billion in 2006 when it was taken private) has eliminated approximately 115 jobs this year, or nearly 20 percent of their workforce.

In June, Borders eliminated 274 corporate jobs both in Ann Arbor and throughout the country.

Corporate News
Sumner Redstone's difficulties in renegotiating his debt has been a major disruption to corporate status of Simon & Schuster parent CBS (and has done extensive damage to the stockholdings of employees). Today Viacom announced plans to cut 850 jobs.

But there is also some cautiously optimistic news, as the FT reports that "Sumner Redstone has reached agreement with his daughter, Shari, to put some of National Amusement's 1,500 cinemas on the block rather than the entire division, as part of debt-restructuring discussions to avoid selling more shares of Viacom and CBS, according to people familiar with the matter.... The company is expected to hold on to theatres in the New England area, where National Amusements is based and which account for about half of the US-group's value." FT

The bankruptcy of distributor EUK and the Woolworths stores is likely to produce significant writeoffs for publishers in the UK. Unlike the AMS bankruptcy, the chances of vendors recovering much if any money are considered quite slim. At the same time, holiday book sales to some of the biggest accounts (like Tesco) will be down, and publishers may need to reprint additional stock to replace books that are stranded in EUK's warehouse to capture some of those holiday sales.

Here the one bit of good news is that EUK was given a special exception to distribute millions of copies of JK Rowling's TALES OF BEEDLE THE BARD to their customers, including over a million copies to Tesco alone. The Bookseller suggests the book's goal of raising money for charity may have helped but that sounds dubious to us; most likely the administrators decided it was better to put the millions of books into the marketplace rather than having them lose their entire value sitting in the warehouse.

Earlier this year Bertelsmann sold the declining Direct Group North America, with annual sales of about $1.3 billion, incorporating the Bookspan book clubs as well as Columbia House. We've barely heard a peep on this.

Reed Elsevier, a generally strong company, has increasing troubles with the rocky efforts to sell their magazine division. Today the Royal Bank of Scotland downgraded their stock and Reuters reports "a newspaper says the publisher could skip dividends in the next two years if it can't sell its trade magazine unit." (If they don't sell the division, their credit rating is likely to get downgraded as well.)

The ineptness of explaining Harcourt Houghton Mifflin's policy of acquisitions pales next to the larger fate of the heavily over-indebted company, carrying over $7 billion in loans. The year began with the first stages of compressing the trade units of the two companies (losing, by our informal reckoning, at least dozens of jobs), at the time bringing adult trade of the combined companies down to publisher Becky Saletan and a dozen editors. The new abandonment of the trade line is even more worrisome; a quick sale would be a blessing.

And for trade publishers, the biggest story of this year, and next year: Borders?

Meanwhile, the most overcovered story of the year is simple and obvious: Kindle, Kindle, Kindle (and every other ereader). The AAP has accounted for roughly $36 million in ebook sales for the first three quarters of the year. (This week we finally got another real statistic: "Sony for the first time disclosed that it sold 300,000 units of its Reader Digital Book globally since the device launched in October 2006.... In addition, Sony said over three million e-books have been downloaded to the devices in that time.")

Canada's Thomas Allen Postpones Spring Until Fall

Similar to the recent move by Atlas & Co., Canada's Thomas Allen Publishers is "postponing" most of their planned spring 2009 releases until the fall. The company "generally releases only 10 to 12 books per year," the National Post notes.

President Jim Allen says, "We are postponing a few of our spring titles due to the fact that we're not ready to publish them. This happens from time to time in book publishing for a variety or reasons, and given the literary nature of our list and the economic climate we're in, we have to be absolutely certain that we have everything right." Post

There is Good News, Too, If You Know Where to Look

Here is at least some.

As the NYT notes today, in outlets monitored by Nielsen BookScan, "sales for the year are actually up slightly," even as "sales in October and November had weakened drastically."

(Consider this: North American "media" sales at Amazon will be up about $700 million for the year, which will be significantly more than the expected drops in sales at BN, Borders, and Books-a-Million combined.)

BookNet Canada, which tracks point-of-sale data covering approximately 75 percent of the market, says that for the four weeks ending November 23, dollar sales rose 2 percent and unit sales rose 4.9 percent, concluding that "Canada might be the only English book market still in positive territory."

Unfortunately, that could be due in part to the relative cheapness of books in Canada compared to the US, with the Canadian dollar still trading at under .80 against the US dollar.

But in general, the dollar has retained its recent strength (boosted again today by interest-rate cuts in Europe), which for the time being helps lift the performance of American publishing companies owned by British and EU companies.

Penguin Group USA benefits the most, given the 41 percent gain in the last year for the dollar against the pound, now at 1.46 cents to one pound sterling.

Random House, Hachette and Macmillan all enjoy a 17 percent gain in the last year for the dollar against the euro (and a 22 percent gain from the crippling lows just six months ago).

Of course that works in reverse for HarperCollins, where the British unit's performance is currency-impaired, and to a lesser extent Simon & Schuster (whose UK unit is smaller than its peers). The pound has suffered against the euro, too, down 16.5 percent in the last year, so EU conglomerates with large British divisions take the biggest hits--particularly Hachette, as well as Random House.

As previously reported, some trade units are having great years. Hachette in the US has paid out an extra bonus to employees, and independent publishers with timely books such as Public Affairs (Scott McLellan; George Soros; Charles Morris' The Trillion Dollar Meltdown) are doing well.

As for today, there's the release of JK Rowling's TALES OF BEEDLE THE BARD, which the AP says has a global print run of 8 million copies.

Meanwhile, despite all the attention for the books HMH isn't buying, our deal reports continue to show steady activity in the marketplace. (Over 90 deals in the past three days; 700 reports since November 1; 1375 since October 1.

by Craig Morgan Teicher -- Publishers Weekly

A hint of optimism follows one of publishing's bleakest weeks in the form of digital announcements from two of the big trade houses: Penguin Books and Random House. 

The bigger news comes from Penguin Group USA, which today announced a new program it is calling Penguin 2.0, Called by CEO David Shanks, "the next evolution of the Penguin brand," the Penguin 2.0 initiative at this point includes two programs, both centered around a new section of the Penguin Web site: www.penguin.com/whatsnext, which will feature a new blog and access to exclusive Penguin content, including enhanced e-books, videos and special print products. Penguin Personalized, the first print enhancement to be offered through the Penguin 2.0 site, is a partnership with SharedBook, which will allow consumers to add a custom dedication to particular Penguin books, which will be printed POD and shipped. Penguin is starting the program with a holiday-themed title: A Christmas Carol and Other Christmas Writings by Charles Dickens. A dozen more titles will be added in the next few months.

The other piece of Penguin news is Penguin Mobile, an iPhone app, available for free from the Apple App store. The application makes the features of the Web site-the blog, book previews, podcasts, news and Penguin-specific book-finding tools-available on the iPhone. Some Penguin e-books are already available to iPhone users through eReader; the Penguin Mobile app offers the Penguin 2.0 site's enhanced content, not access to Penguin e-books. Jeff Gomez, Penguin's senior director of online consumer sales and marketing, pointed out that Penguin is "the first of the big New York publishers to have a dedicated iPhone app."

Random House's announcement of a partnership with Stanza, the popular iPhone e-book reader from Lexcycle, follows recent announcements from other companies-including Pan Macmillan and Fictionwise-through which e-books by several RH authors will be available for free beginning today through Stanza. The roster of authors includes Alan Furst, Julie Garwood, Charlie Huston, David Liss, Laurie Notaro, Arthur Phillips and Simon Rich. The first books available will come from these authors' backlists and will include previews of upcoming 2009 titles by each. Acknowledging the growing need to use free content to market new books, Avideh Bashirrad, deputy director of marketing for Random House, said, "we're happy to modify our traditional marketing methods to make use of the new technology available to readers today."

 In Italy they say, "It doesn't matter how many dragons you kill, what matters is who takes home the princess."

That's all for this week. May God bless and keep you.

Kellyr

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