A torrid week in the book trade
It's been a torrid week in the US and UK book trades, as destabilising staff cuts underline the poor situation in retail. In the most crucial two weeks of the trading year, the book trade is on tenterhooks about the outcome of Christmas. Will consumers spend their scarce resources on books? Will books escape a widely heralded massacre in the shops because they represent good value in a recession? Nobody knows the answer to this question but the tension is mounting.
Friday brought a respite for UK publishers affected by Entertainment UK, the owner of Woolworths, going into receivership. The Publishers' Association has successfully negotiated a formula whereby the distribution arm, EUK, can resume supply to UK supermarkets. The wholesaler Bertrams, second biggest in the country and also owned by EUK, is reported to be close to a sale, which may well mean further consolidation in the already highly consolidated wholesale sector.
In the US publisher Simon and Schuster cut 35 positions in the company this week, Random House probably two as a part of a restructure and Thomas Nelson 54, an astonishing 10% of its workforce. The American book chains are suffering, with Borders unstable and the management 'no longer contemplating a transaction to sell the entire company' but still thinking of selling Paperchase.
Although Amazon projected that its own sales in this quarter would fall between $6 and $7 billion, this looks very much like a Christmas when online will do relatively well, with much use of online price comparison sites. Recent research from Deloitte in the UK showed that consumers spending online were planning to spend 15% more there than last year. It suggested that the number of consumers using the Internet was stable but that those who already use it are using it more.
Bloomsbury has already shown that it's an ill wind and that this is a good time to have money to spend on corporate acquisitions. Still working on spending its £50 million Harry Potter war chest, it has just announced the acquisition of Wisden, publisher of the world-renowned Wisden Cricketers' Almanac. This venerable institution, now in its 145th edition, bestrides the cricket world like a colossus, an apt simile since it's a £40 book with nearly 2,000 pages - and sells 40,000 copies annually.
Bloomsbury no doubt has its eye on the huge Asian market, particularly India, where the sport is a national obsession. Although it has a permanent staff of only four, Wisden employs 128 contributors to update its vast compendium of information, making it an attractively lean operation.
Richard Charkin, Executive Director of Bloomsbury, said: 'We are buying the tradition and we would be mad not to respect it. This is the bible for cricket or, as someone once said, the Bible is the Wisden of God.' Possible Asian or Indian editions and the opportunity to put Wisden online make this an even more attractive acquisition for the company.
So it's not all gloom and doom, but for companies with weak balance sheets and insufficient cash in hand a poor Christmas season may well herald a dismal New Year and more bankruptcies, cuts and redundancies.
