The new News Corp news

I used to be a business reporter, and one of the things that frustrates me as I try to keep up with the exciting world o' publishing is that most publishers are tiny slices of much larger conglomerates that don't necessarily break out the earnings of their publishing houses.

But the proposed split of News Corp is changing that, at least for HarperCollins. News Corp is proposing that it become two companies: Fox Group, which will be TV and movies, and the new News Corp, which will be the newspapers and HarperCollins.

Because of this, News Corp released a preliminary proxy statement a couple of days ago. It's no ordinary proxy statement (yes, I am a business nerd, and I have a strong sense of what constitutes an ordinary proxy statement): It basically states the financials of the new News Corp as though it were an independent company.

Which means that, instead of lumping together the newspapers and HarperCollins and God knows what else as "publishing," News Corp broke them apart!

As you can imagine given my dorkitude, I very nearly peed my pants with excitement over this.

One of the notable things about this is how small HarperCollins is compared to the rest of News Corp. By revenues, the new News Corp is only going to be about a quarter of the size of the old News Corp. And HarperCollins only contributes about 14% of the new New Corps' revenues.

There's a lot of drama coming out of this proxy statement (see? I'm not the only geek in town) because the new News Corp lost a lot of money this year. But that loss didn't come from HarperCollins--it came from the various scandals surrounding News Corp's newspapers doing all kinds of things they shouldn't have. The newspapers and news services account for 82% of the new News Corps revenues, so changes in that business segment result in big changes in the bottom line.

HarperCollins, though, is making a modest profit.

How modest? Well, first I'm going to asterisk all this by saying that they report EBITDA (earning before interest, taxes, depreciation, and amortization), and I hate EBITDA. EBITDA is one of these not-especially-well-regulated numbers that leaves a lot of leeway for bullshit, plus who the hell cares if you're making a profit before you pay your taxes and other obligations? You still have to pay them, and you'll still be up the creek if you can't.

But EBITDA is what they report, so EBITDA is what I'll talk about--all the really exciting depreciation and amortization is happening with the newspaper unit, anyway.

So, in the fiscal year ending June 30, 2012, HarperCollins reported an EBITDA of $86 million on revenues of $1.189 billion.

In the fiscal year ending June 30, 2011, HarperCollins reported an EBITDA of $93 million on revenues of $1.195 billion.

And in the fiscal year ending June 30, 2010 (yes! they gave out three years of information! I'm so happy!), HarperCollins reported an EBITDA of $106 million on revenues of $1.269 billion.

Notice something about those numbers? They're going down. Not a cratering, but a steady decline, so that HarperCollins cleared $20 million less (before taxes and all that) in 2012 than it did in 2010.

And it's not just that the overall number going down--HarperCollins' profit margins are dwindling, too, meaning that profits are falling faster than revenues. The company had a profit margin (before taxes, etc) of 8.4% in 2010, 7.8% in 2011, and 7.2% in 2012. (To compare: The scandal-plagued newspaper division had a profit margin of 13.3% in 2012.)

According to the company, the decline in revenues in 2011 was because 2010 was an especially good year (there was a licensing settlement and a hit book in 2010). The decline in revenues in 2012, in contrast, was "primarily due to lower print book sales at the U.S. General Books division." Oh, and that pesky antitrust lawsuit didn't help earnings any, either.