News Corp. buys romance publisher Harlequin
Rupert Murdoch is doubling down on romance.
News Corp. is buying Harlequin Enterprises, a publisher of novels such as "Destiny's Last Bachelor?" and "The Heartbreaker Prince," for $415 million in cash, according to a statement today. Murdoch is purchasing Harlequin from Canada's Torstar Corp. and will fold it into News Corp.'s HarperCollins books unit, which already has a romance imprint called Avon Romance.
Harlequin was founded 65 years ago and grew to become the world's biggest publisher of romance novels, which are often referred to as "bodice rippers." The acquisition gives HarperCollins a foothold in 11 foreign countries and expertise in translations. The deal also underscore's Chief Executive Officer Robert Thomson's strategy of what he calls "globalization and digitization" -- the idea that News Corp. needs to sell content better around the world and online.
"This is really part of our overall play in those areas," he said in an interview. "It also signals the book business is an important part of the company."
Harlequin publishes more than 1,300 authors and releases more than 110 titles monthly in 34 languages. Currently almost all HarperCollins books are published in English.
Torstar, based in Toronto, rose 22 percent to C$8.15, the biggest jump on record. News Corp., controlled by Murdoch, rose 1 cent to $17.31 at the close in New York.
News Corp., which also owns the Wall Street Journal and New York Post, split off from Murdoch's bigger and more lucrative TV and film business, 21st Century Fox Inc., last June.
The acquisition should help bolster News Corp.'s book unit sales, which brought in about $1.4 billion last fiscal year, or about 15 percent of total revenue. The book unit may now make up about 20 percent of News Corp.'s total sales, according to Eric Katz, media analyst for Wells Fargo Securities, LLC.
Harlequin brought in C$398 million in revenue last year, accounting for 29 percent of Torstar's sales and 32 percent of its earnings before interest, taxes, depreciation and amortization.
Still, it's a shrinking business, as book publishers have grappled with a shift in prices as digital books become more popular. Also, the success of "Fifty Shades of Grey," which created a new romance genre focused on bondage and submission, has cut into Harlequin's revenue, which has been falling since 2009. The decline accelerated to 9.5 percent in the fourth quarter.
'The Alchemist'
In addition, a legal headache that was poised to go away has also returned. A U.S. appeals court in New York yesterday restored some claims from a group of writers aiming to represent about 1,000 novelists for royalties from sales of electronic books. A U.S. district judge had dismissed the lawsuit last year.
Harlequin's authors will join the ranks of HarperCollins, which has published Joyce Carol Oates, author or "Blonde," and Paulo Coelho, who wrote "The Alchemist."
Harlequin has more than 1,000 employees worldwide, including more than 350 in Canada. Torstar is also the publisher of Canada's top-selling daily, the Toronto Star.