Penguin sees dark clouds after strong Christmas

LONDON Tue Nov 29, 2011 12:27pm EST

LONDON (Reuters) - Book publisher Penguin, a unit of Pearson (PSON.L), sees "dark clouds" gathering after a strong Christmas, as structural and cyclical factors combine to obscure the view.

Penguin's Chief Executive John Makinson said on Tuesday the publisher's Christmas list was strong -- with authors including comedian Lee Evans, "Diary of a Wimpy Kid" writer Jeff Kinney, and Tom Clancy -- although not as strong as last year's. Sales in the first nine months of the year were flat.

In 2010, Penguin had Britain's best-selling non-fiction title of the last decade, Jamie's 30 Minute Meals by star chef Jamie Oliver, among other blockbusters.

"Last year, we had a truly extraordinary fourth quarter," Makinson told the London leg of the Reuters Global Media Summit.

"We don't expect publishing performance in the fourth quarter to be quite as strong as in the fourth quarter of 2010, but it won't be bad."

Sales at Penguin, which make up about 19 percent of Pearson's revenues, were flat in the first nine months of this year, hurt by turbulence in the book retailing market including the insolvency of Borders bookshops in the United States.

The book industry in general is struggling to adapt to new, digital means of distribution controlled by powerful new players like Amazon (AMZN.O) and Apple (AAPL.O), as bricks-and-mortar bookstores disappear from the high street.

"Those are the things that influence the size and shape of the industry, and clearly we're going through an enormous amount of change in that respect at the moment," Makinson said.

Asked what he saw when he looked into 2012, Makinson replied: "Dark clouds."

He said that even though the book business was by its nature defensive, structural changes in the industry that were largely outside the control of publishers made it very hard to predict next year's performance.

"This is a business which has always been driven very much by supply rather than demand factors," Makinson said. "Consumer taste doesn't actually change all that much but what does change is the availability of books in different channels."

He said: "It is tougher to predict how we will be 12 months from now, as an industry, than pretty much at any time that I can remember."

(Reporting by Georgina Prodhan; Editing by Elaine Hardcastle)