Dominoes Fall
in Deutschland
FROM PUBLISHING
TRENDS (FEBRUARY 2001)
As
the year drew to a close in Germany, so did the long-running
speculation about who would pick up the venerable Heyne
Verlag, which for years was subject to rumors about
an imminent sale to one of the four major players in
the country: Bertelsmann, Holtzbrinck,
Bonnier, and in the end the winning bidder for
Heyne, the Axel Springer Group. The endgame for
Germany’s largest privately owned book publisher has
raised anxiety over consolidation — there’s “a lot less
competitive publishing compared to a year ago,” one
observer says — and has been seen as the end of an era,
as sole owner Rolf Heyne died of cancer two days
after the December sale. But it also heralds a sort
of watershed for mass market publishing in Germany,
and offers a formidable threat to Bertelsmann’s Goldmann,
setting the stage for intensified jockeying among giants
in what by all accounts is a profit-imperiled market.
Heyne will be folded into Springer’s Econ Ullstein
List group to create the merged Heyne Ullstein,
to be headed by Christian Strasser. This in itself
is a sequel to the events of 1999, when Springer combined
previously separate book publishers in Munich and Berlin
to form the new group Econ Ullstein List. List was positioned
as a literary imprint; Econ as non-fiction and business;
and Ullstein as the platform for the mass market, where
it had already been a contender. Add to this the fact
that Springer has been keeping the flames burning at
its long-running Cora line, a joint venture with
Harlequin, which turns out some 500 novels a
year and counts sales of 600 million pocket romances
in Germany, Austria, and Switzerland to date. “An active
sales strategy will be adopted,” the company reported,
“above all in the paperback segment,” and licensing
partners in Germany and abroad have been put on notice
to keep the deals coming.
The Heyne merger now gives Springer’s book group a turnover
of around $160 million, placing it second to Bertelsmann’s
Random House Germany group, which posts turnover
in the $197 million range. It’s quite a jump for Springer,
whose 16 book publishers reported sales of 12.3 million
copies in 1999 — 89% of those sold in Germany — for
a total of DM151 million in 1999, up from DM92 million
the year before.
In the last few years, turmoil has been no stranger
to the top German houses — “Holtzbrinck has been changing
managers like Kleenex,” one agent observes — and the
Springer Group itself has sneezed through four different
chairmen since 1991. It is due to take on a fifth, Mathias
Dpfner, when he picks up the reins from August
Fischer next January. Heirs to the Springer family
control 50% of the company (the Kirch Group has
a 40% stake), which still publishes Germany’s largest
daily newspaper, Bild, and which took in a total
of $2.6 billion in revenues in 1999.
By comparison, Bertelsmann’s total turnover was some
$16.5 billion. For its part, the company managed to
rattle the German market a bit when it announced that
its Munich-based book group would take the Random House
name, under the direction of Peter Olson, who
formally takes over global book operations in April.
As for the bigger picture, Bertelsmann AG has announced
that within the next three years it intends to pump
up its return on sales to 10% from the current 5.7%,
a decision that was thought to have some bearing on
the reported “difficult situation” regarding its stake
in the joint venture Barnesandnoble.com.
For a difficult situation, however, you don’t have to
look further than the German market itself, where sales
remain flat but the number of titles keeps rising —
from 45,000 in 1990 to more than 60,000 in 1999. Including
rereleased editions, the number of new titles per year
now tops 80,000, according to a report by the Deutsche
Presse agency. But total German sales rang in at $8.3
billion in 1999, up a slim 1.5% from the year before.
This has obviously set off profit alarms at the largest
publishers. A German trade magazine reported that Bertelsmann’s
book profits were an anemic 0.7% of sales in the 1999-2000
year. And at Holtzbrinck, subsidiary houses Rowohlt,
S. Fischer, and Droemer-Weltbild were
reportedly treading water, prompting rescue efforts
from hastily retained management consultants.
But Marcella Berger, vp dir. of subsidiary rights
at Simon & Schuster, thinks it’s premature
to say how the German market will shake out. The most
notable impact on American publishers thus far, she
says, has been the extraordinary strength of the dollar
against the mark. The weak currency makes German publishers
seem cautious. On the other hand, it may be that competing
divisions are loath to bid against each other, contrary
to stated corporate policy. For now, it seems safe to
say this: Germany has always been a major market, but
it may turn out to be a little less major in the foreseeable
future.
©2001
Publishing Trends
