Weekly Publishing Notes: News Corp Markets Harper Lee’s New Novel, NYT’s T Brand Studio Opens London Office

The publishing companies saw significant activity this week, with News Corp’s subsidiary HarperCollins planning a mega marketing campaign for Harper Lee’s Go Set a Watchman. The To Kill a Mockingbird sequel is Lee’s first book in 55 years and early demand for the book has been exceptional. HarperCollins is already benefiting from high demand for Veronica Roth’s Divergent series and Chris Kyle’s American Sniper, and now Watchman looks set to bring in North American revenues worth $30 million in its first year of publishing. On a separate note, The New York Times Company (NYT) recently announced that its innovative creative marketing agency T Brand Studio is opening a new office in London in order to provide its content marketing services to international clients. NYT’s Online Advertising segment contributes 23% to the company’s stock value and is expected to bring in revenues worth $290 million in 2015. On that note, we discuss below these developments related to the publishing companies over the past few days.

News Corp Has High Hopes From To Kill A Mockingbird Sequel

News Corp’s (NASDAQ:NWSA) subsidiary HarperCollins is planning a colossal marketing campaign for Harper Lee’s Go Set a Watchman. ^[1] The novel is a sequel to the universally acclaimed To Kill a Mockingbird and Lee’s first book in 55 years. Early demand for the book has been robust, encouraging the publisher to print more than 2 million hardcovers. Amazon.com has stated that Watchman is its most preordered print book since J.K. Rowling’s Harry Potter and the Deathly Hallows (2007). The novel is expected to bring in upwards of $30 million in first-year North American revenue.

News Corp’s book publishing revenues have trended well in the recent past, increasing from $1.14 billion in 2007 to $1.61 billion in calendar year 2014. ^[2] The segment has benefited from high demand for Veronica Roth’s Divergent series and Chris Kyle’s American Sniper. The acquisition of Harlequin is also aiding the top line as well as the bottom line of the company. Additionally, the company is seeing high growth in e-book sales, which now account for over 20% of overall consumer revenues for the company. It must be noted that digital books have lower production and distribution costs than print books and this will help the company see margin growth in the long run. We currently estimate segment revenues to be north of $2 billion by the end of our forecast period and EBITDA of $250 million, representing 20% of the company-wide EBITDA.

News Corp’s stock declined around 2.4% through the week. We currently have a price estimate of $20.3 for News Corp. For the year 2015, we estimate revenues of $8.61 billion, compared to consensus estimate of $8.68 billion, and EPS of $0.43, compared to a consensus estimate of $0.46.

New York Times’ T Brand Studio To Set Up Shop In London

The New York Times Company (NYSE:NYT) announced recently that its innovative creative marketing agency T Brand Studio is opening a new office in London. ^[3] The London Office will offer international clients access to T Brand’s content marketing services expertise and the award-winning Paid Post native advertising platform. The new office is expected to be operational from August 2015 with an initial staff of four. T Brand Studio’s New York location has been quite successful for NYT, completing 70 campaigns for 60 advertisers, including the award-winning campaign about women in prison concerning Netflix‘s (NASDAQ:NFLX) Orange Is The New Black and major campaigns for Google (NASDAQ:GOOG) and Cole Haan. According to our estimates, Online Advertising segment contributes 23% to NYT’s stock value and is expected to bring in revenues worth $290 million in 2015.

New York Times Company’s stock declined around 3.00% through the week. We currently have a price estimate of $12 for New York Times Company. For the year 2015, we estimate revenues of $1.63 billion, compared to consensus estimate of $1.58 billion, and EPS of $0.59, compared to a consensus estimate of $0.54.

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1. News Corp. expectations high for new Harper Lee book, July 9 2015, Seeking Alpha [↩]
2. News Corp’s SEC Filings [↩]
3. The New York Times To Open “T Brand Studio” In London, July 8, 2015, New York Times Press Release [↩]