CBS Corporation, parent company of Simon & Schuster, has just released its second quarter 2014 financial results, with performance numbers for the publishing group that is reportedly in talks with Amazon.
“Publishing revenues for the second quarter of 2014 increased to $211 million from $189 million for the same prior-year period, driven by higher print book sales,”said the earnings release. (Doncha love these little old mom’n’pop operations in the quaint and folksy world of publishing?) “Digital books continue to represent a significant portion of sales, with 25% of total Publishing revenues coming from digital sales during the second quarter of 2014.”
In addition, Leslie Moonves, CBS CEO, has got up to state in public that Amazon is in deep discussion with S&S, and that he has met with Jeff Bezos personally. “Amazon has a definite point of view about what should be done in the publishing business,” the Wall Street Journal quoted Moonves as saying. “It’s going to be a very interesting thing to watch.”
What those talks were about wasn’t detailed at the time, but at least one report spun this into a potential Amazon takeover bid for S&S. Others insisted that the talks had more to do with confirming S&S’s position in the ongoing Amazon/Hachette faceoff. That said, an acquisition of S&S by someone could still be on the cards. Reports have circulated for a couple of years that the Big Five publisher, which despite its industry importance is the smallest contributor to CBS’s revenues of any of the parent’s media industry segments, could go to News Corp. or another interested buyer. And the failure of the Hachette bid to acquire Perseus Books Group has underlined for all to see the continuing pressure for consolidation in the publishing business – above all to face off against Amazon.
“Regardless of the media landscape, and regardless of the means of distribution, great content will always be king,” said Sumner Redstone, Executive Chairman of CBS, in the results announcement.
I’m skeptical about those Amazon/S&S takeover rumors. Having the largest retailer take over giant publisher might be too much vertical integration even for the Obama DOJ.
Heck, it’s a bit much even for the hubris of Jeff Bezos. It would create no end of trouble with the other major publishers.
If you are an author and agent with a publisher without an Amazon contract, don’t you think you might switch publishers for your next book to go to one who will have an agreement going forward? Might this become a competitive advantage among publishers eager to get new bestseller authors to switch?
Those publishers planning to build direct-to-consumer sites for books will find the cost to build and maintain the infrastructure exceeds the extra margin they could have given Amazon. Just the labor in IT alone will be more. And the real problem is consumers prefer to shop where they shop frequently for lots of goods so they remember the dang password. Trying to change shopping preferences from retailer to manufacturer has a dreadful history of failure.