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.
