The global ranking of the publishing industry 2015

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Dr. R?diger Wischenbart Content and Consulting

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The Global Ranking of the Publishing Industry 2015

Current shifts and transformations in the international book business.

Findings and Insights.

Table of content

The approach.............................................................................................................. 2 General observations.................................................................................................. 3 Strong regional shifts .................................................................................................. 7

China's entry into the world publishing arena.......................................................... 7 Steady Brazil ........................................................................................................... 7 Russia's complex ride ............................................................................................. 8 Sectorial snapshots ................................................................................................. 9

A difficult context for general trade ...................................................................... 9 The complexities of the education markets........................................................ 10 New (and old) challenges that this Global Ranking must confront ........................ 11

Ruediger Wischenbart: Global Ranking oft he Publishing Industry 2015. Analysis.

Page 1

The approach

The Global Ranking of the Publishing Industry, which has been updated every year since 2007, currently represents 57 companies that each report revenues from publishing of over 150 m (or 200 m US$).

The overall number of listed companies has shown a fluctuation between slightly over 50 to up to 60. (As a consequence, a few historic observations in the analysis here below refer only to the top 50 companies, to allow more relevant comparisons.)

This ranking is based, for each company, on mostly 2014 revenue data, collected from the best information available, which comes predominantly either from official company reports, or has been directly provided by the companies for this report, or if neither was possible, information has been retrieved from official company data registries.

For a few groups, only 2013 revenue figures are available at this point. No meaningful information at all could be collected for the publishing activities of Disney and of Panini, so that these groups are not included.

Since 2011, a specific research effort is directed at companies in Brazil, PR China, Korea and Russia, with meaningful support from sources in these countries, and has resulted in widening the scope of this report by emphasizing the dynamic developments in emerging economies.

As far as possible, this ranking is based on break downs of revenues that derive from all forms of publishing (including books, digital material, and professional information), as well as book distribution. Revenues from newspaper and magazine publishing as well as news wire services and corporate publishing have been excluded, as far as the available information allowed for making such a differentiation. However, in several cases, traditional as well as new commercial activities, and the respective financial reporting, has made it challenging to apply this definition in the strictest sense, as we would have wanted. These cases will be highlighted, and discussed in detail, in the overall analysis here below.

The Ranking has been established in Euros. Data reported in other currencies have been converted at exchange rates of December 30, 2014.

The Global Ranking of the Publishing Industry is an initiative of Livres Hebdo (livreshebdo.fr ), France, co-published by BookDao ( ), China, The Bookseller ( ), UK, buchreport (buchreport.de ), Germany, Publishers Weekly ( ), USA, and PublishNews Brazil ( ). It has been researched by R?diger Wischenbart Content and Consulting ( ).

? by Livres Hebdo 2015 Working contact: ruediger (at)

Ruediger Wischenbart: Global Ranking oft he Publishing Industry 2015. Analysis.

Page 2

General observations

The Global Ranking 2015, which is based predominantly on 2014 revenue data, lists 57 publishing groups, as in 2014, with a combined revenue of 59,328 (up 11 % from the previous year).

After years of relative stability, the reported results for 2014 now show a clear strengthening at the top, with the 10 largest groups accumulating revenues of 31.8bn (up 12% from 2013), and accounting now for 54% of all industry revenue as recorded in this Ranking (up from 53% in both 2013 and 2012).

Over the years, the trend of the biggest growing ever bigger, becomes clear, and ever more so as all of the companies listed in this Ranking are already a selection of the market leaders in all territories and segments of the industry.

Evolution of revenues (m) of all Top 50 Groups

70.000

60.000

50.000

40.000

30.000

20.000

10.000

2008 2009 2010 2011 2012 2013 2014

Total top10 28.06 27.55 30.87 28.69 29.96 28.49 31.82 Total Top 11-20 10.66 10.46 11.46 11.28 10.99 11.33 12.04 Total Top21-50 10.21 10.14 11.67 12.71 13.83 12.78 13.70 Total Top 1-50 48.93 48.16 54.02 52.68 54.80 52.61 57.57

Total top10 Total Top 11-20 Total Top21-50 Total Top 1-50

Chart 01: Evolution of revenues (in m) of all Top 50 Groups, 2008 to 2014.

Ruediger Wischenbart: Global Ranking oft he Publishing Industry 2015. Analysis.

Page 3

The top segment of the 10 largest conglomerates in publishing highlights a number of developments:

As in previous years, the top is, and remains, clearly a domain of actors specialized in either educational (Pearson) or scientific and professional information (ThomsonReuters, Reed Elsevier - now rebranded as RELX -, or Wolters Kluwer); Significant growth is largely reserved to professional information services, with ThomsonReuters as their benchmark and role model, as they extend the scope of the industry, and have successfully shifted toward digital and renewable income (subscriptions); General trade publishing is shrinking in revenues, with Penguin Random House as the most visible exception, due to the merger between Random House (Bertelsmann) and Penguin (Pearson); The biggest news though comes from China, as we could gather sufficient data and company information to include two new entrants at the very top, with Phoenix and China South (see below for details).

Rank 2015 (Data 2014)

?

1

+

2

-

3

?

4

?

5

NEW 6

NEW 7

-

8

-

9

-

10

Publishing Company (Group or Division)

Country Mother

Country

Publ.

Corporation or Parent

Company Owner

Corp.

Pearson

UK

Pearson PLC UK

ThomsonReuters US

RELX Group (Reed Elsevier)

UK/NL/US

The Woodbridge Company Ltd.

Reed Elsevier PLC & Reed Elsevier NV

Canada UK/NL/US

Wolters Kluwer

NL

Wolters Kluwer NL

Penguin Random House Phoenix Publishing and Media Company China South Publishing & Media Group (ZhongNan)

US

Bertelsmann AG Germany

China (PR) Phoenix

China (PR)

China (PR)

China South (ZhongNan)

Hachette Livre

France

Lagard?re

France

McGraw-Hill Education

Holtzbrinck

US Germany

Apollo Global Management LLC

Verlagsgruppe Georg von Holtzbrinck

US Germany

2014 m/Euro

2013m/Euro

2012 m/Euro

5.809 4.729 4.405 3.660 3.324 2.333

5.655 4.015

6.913 4.080

4.417 4.479

3.565 2.655 2.015

3.603 2.142

2.119

1.621 1486

2.004 (est.) 1795

1.643

2.066 1.434

2.077

(2011) 1763

1.610 1.608

Table 01: The 10 largest publishing groups worldwide 2015 (data 2014)

Ruediger Wischenbart: Global Ranking oft he Publishing Industry 2015. Analysis.

Page 4

Revenue development among the top 10 in the past five years does not show one clear pattern.

Revenues Top 10 Groups (in m)

8.000 7.000 6.000 5.000 4.000 3.000 2.000 1.000

-

2010 2011 2012 2013 2014 (m) (m) (m) (m) (m)

Chart 02: Revenue development in the top 10 publishing groups (in m)

A comparison of the largest publishing groups reflects distinct trajectories according to segment and territory.

Educational world leader Pearson has grown strongly, and then decided to even further enhance its focus on its core asset of educational, by spinning off its trade arm in the merger with Bertelsmann's Random House, and most recently even incorporating its newspaper centered operations (including notably the Financial Times, and a stake in The Economist) into the much broader "professional" division;

In return, Random House, through the merger with Penguin, bets similarly on the benefits of consolidation around one core competence, that is general trade;

Hachette's flat results have resulted in rumors anticipating a major acquisition any time soon (as HarperCollins has recently done, as #17, with the acquisition of Canadian romance specialist Harlequin, to bring a truly global distribution network and market know-how to the benefit of a formerly almost exclusively English language publisher);

Ruediger Wischenbart: Global Ranking oft he Publishing Industry 2015. Analysis.

Page 5

Holtzbrinck so far had opted for cautious, yet steady organic growth, notably in its trade division (now re-branded as Macmillan Publishing), but in its scientific and academic division (now Macmillan Science and Education), the acquisition of Springer Science and Business Media (#19) will propel the German group into an entirely different, global dimension in the science and professional sector, which should open the gates for a much broader geographic expansion, as well as subsequent growth; All four Chinese groups listed in this Ranking, Phoenix, China South, China Publishing Group and China Education, result from a strategy of bringing assets from one core segment (regional, educational, trade) each under one big roof, and develop organic growth from there, driven by the expanding overall market in China.

Ruediger Wischenbart: Global Ranking oft he Publishing Industry 2015. Analysis.

Page 6

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