by Steve Laube
By most accounts the purchase of Nelson by HarperCollins will put the #1 largest Christian Publishing house under the same ownership as the #2 largest Christian Publishing House (Zondervan). The press release mentions that the sale “is subject to customary regulatory clearance.”
It will be interesting to see if the Department of Justice cares about Christian publishing, or even understands it. Over in the telecommunications industry they are blocking the merger between ATT and T-Mobile, which are #1 and #4 in wireless service. With the purchase of Nelson, it is combining #1 and #2. So it should come under some scrutiny. But it might not because:
- The DOJ might not understand the Christian book business. If they just consider this as one publisher acquiring another in the general realm of publishing, it doesn’t look like a #1 and #2 combination. So they would let it through. I expect that this is how they would view it. For example, would they try to block two publishers from combining if they were both big non-fiction houses? I doubt it. It is hard to make a case that publishing one kind of book versus another is any special skill, even if it is.
- Sprint is spending huge legal and lobbying dollars to try to prevent the ATT merger. That’s because they will essentially be forced to make some strategic move, as they would become a handicapped small #3 in the industry. There isn’t likely to be a competing publisher spending the legal dollars to try to block a merger, even if it has the same competitive effect. Not even one of the other Big Six.
- The total dollars involved in the merger might not be big enough to draw the attention of the DOJ. They still have to review it, but it could be perfunctory.
But if/when the purchase goes through, I think that, after a period of reorganization:
- As mentioned in yesterday’s post there will likely be one less competitor in bidding on new projects. This has the potential to suppress competition for advances.
- Another possible impact will be a potential reduction in the total number of books published. We have always been at the mercy of a particular year’s business plan, but when a publisher is publicly held the pressure increases. So if they decide to cut back on YA fiction, for example, that’s just the way it is. But don’t forget that until 2006 Thomas Nelson was publicly held (and on the NY Stock Exchange), so that corporate culture has been a part of Nelson’s M.O. for a long time.
- A third thing you could also see is additional consolidation inside the Christian publishing industry. As publishers learn that they need scale in order to survive, this could trigger a strategic scramble for partners. There may be some other publisher purchases to create economy of scale in order to compete.
I doubt the DOJ will do anything. A key element seems to be missing. Even at nearly 50% of the religious book market, it is hard to claim they will have any ability to block competition, especially when you consider the number of times a one-book publisher has had their book reach the top of the bestseller lists.
Christina Suzann Nelson
Thank you for keeping up informed.
I appreciate the insight you give. Do you think the publishers have been open to such purchases because of the rise in indies and ebooks?
That’s my question, too, Paula.
It seems a logical conclusion that the indies and e-books are snatching profits from the traditional publishers, causing this pressure. Is that what is truly happening or is there some other undercurrent?
If there are 3.1 billion books sold in the United States each year and 500,000 books published by “independent” publishers and the average self-published book sells 50 copies, then “independent” publishers only account for about 1% of the books sold in the United States. I could be wrong, but I wouldn’t expect publishers to consider that a driving force in their decision making process.