Paperback Publisher's Hail Mary: Selling Off Titles to HarperCollins

If ever there was any doubt that book publishing is in flux, a look at the state of mass-market paperbacks would dispel it. The category thrived in the 1960s and 1970s, but has been sidelined ever since by the larger, more expensive trade paperback. Although the major publishers still rely on sales from mass-market reprints of their top authors, paperback-only houses have all but disappeared.The last remainder in that field is Dorchester Publications, a privately owned publisher of mass-market romance, horror, and thriller novels since 1971, and the distributor since 2004 of imprint Hard Case Crime. But recent moves suggest that Dorchester's lifeboat is threatened by several punctures.

Avon, the mass-market romance arm of News Corp.'s (NWS) HarperCollins, said Tuesday it had acquired select frontlist and backlist romance titles from Dorchester, most notably books by New York Times bestsellers Christine Feehan, Katie MacAllister, and Marjorie Liu. Avon says it's planning the Avon releases of these titles: an unusual move, even by publishing's topsy-turvy standards, and one based on a combination of complex relationships and other factors.

Dorchester's deal with HarperCollins also extends its distribution partnership. Since 2002, retailers ordering Dorchester titles have done so through HarperCollins, which handles its customer service, billing and credit functions.

Dorchester had serious cash-flow problems throughout 2009. Authors had to wait for up to six months to collect their royalty and advance payments, and some threatened to sue (although there's no record of any legal action to date). Dorchester's sale of the titles appears to be a bid to generate emergency cash. Dorchester, whose combined annual revenues are reported to be around $50 million, did not reply to requests for comment.

Distributors' Demises Had a Domino Effect

Dorchester's money woes seem to stem from the bankruptcies of two book and magazine distributors: Anderson News filed involuntary Chapter 7 bankruptcy in February, owing $37.5 million to four of the six major publishers (including HarperCollins), and Source Interlink went into Chapter 11 bankruptcy protection in April as it sought to go private.

These two distributors' going under hit both HarperCollins and Dorchester hard, although differently. HarperCollins in August blamed its significant sales and earnings drop for the quarter ending June 30 in part on Anderson's bankruptcy. (Its next quarter earnings rebounded somewhat.) Dorchester, which also publishes magazines, including True Story and True Confessions, felt the stings of declining magazine circulation on top of the distributor bankruptcies, which wiped out a major conduit for its mass-market titles to be sold in nontraditional retail outlets such as drugstores and supermarkets.

Other signs of Dorchester's woes include Hard Case Crime's announcement that it will suspend its monthly schedule this year and delay the release of its first title until late March, and the loss of its editorial director, Alicia Condon, to Kensington. Condon had been with Dorchester for 24 years, and her switch to become editorial director of romance imprint Brava is viewed as a lateral move, as Kensington is also an independent publishing house with similar annual revenues.

"What's Not To Like?"

In the short term, the Dorchester-HarperCollins deal appears to be a win-win. The eight affected authors end up with a publishing house boasting deeper pockets and wider distribution, and Dorchester gets a desperately needed cash injection that can be used to pay off its debts and catch up with months-late royalty and advance payments.

"Given the difficult publishing climate, the shrinking mass-market paperback market, and Anderson News's demise, which tremendously undermined [Dorchester] through no fault of their own, it's a practical business decision," says a literary agent who represents authors affected by Dorchester's sale. "It's not an adversarial mandate. It's [Dorchester] saying, 'We've worked it out so that we can be back on sound footing.' What's not to like?"

But the deal raises additional questions. It's unknown whether the frontlist titles Dorchester had planned to publish in 2010 will stay on schedule at Avon, or if they'll be delayed. It's also unclear whether authors' contracts with Dorchester stipulated that their books cannot be assigned to another publisher without their permission -- if so, there may be claims that the rights revert back to them.

The long-term effects of Dorchester and HarperCollins's ever-closer partnership are uncertain. If this cash injection doesn't do the job, it may be another step in Dorchester's long death march, making it yet another victim of the chaos in the book business.
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