Barnes & Noble took a major step in growing its publishing operation last week by signing an agreement to acquire Sterling Publishing. Terms of the deal, which is expected to close within 45 days, weren't disclosed, although it is reported to be close to $100 million.

Sterling will be run as a separate business unit and will be headed by Charles Nurnberg, who had been executive v-p; Sterling president Lincoln Boehm is retiring. Nurnberg will report to B&N CEO Steve Riggio, who told PW that B&N's other publishing operations will continue to run as is. Riggio said B&N was attracted to Sterling because the company "prices their books right and publishes into categories we do especially well with." Sterling's major categories include crafts, hobbies, gardening and how-to. The company has a 4,500-title backlist and releases about 1,000 new titles a year, a figure that includes about 500 titles from its distribution clients. Riggio said that the purchase solves B&N's own distribution problems. "Our distribution to the trade has been very limited," Riggio said, "Sterling has a great sales force, and as we publish more books, it gives us a great vehicle" to reach other retailers. Riggio said he hoped other retailers would base their buying decisions on the specific titles, not on who the publisher is. Ed Morrow, owner of Northshire Bookstore in Manchester, Vt., said he will continue to buy Sterling titles as long as the company "acts like a normal publisher and its practices don't change. It's a great backlist house, and we sell a lot of their books. But if it becomes a captive house of B&N, it's really anticompetitive and that would be bad for independent booksellers."

While general-interest publishers felt some unease about the deal, the unhappiest were publishers who compete in some of Sterling's niches. An executive at one such house noted, "If I paid that much money for a company, I'd promote those books," adding that the creation of a "Sterling section" is one possibility he feared. Another niche publisher said the deal "might limit what we can sell to Barnes & Noble." Riggio said other publishers should not be concerned by the deal. He said B&N stocks millions of titles and that the acquisition of Sterling "is about expanding the market."

While one executive wondered about the "transferability" of some of Sterling's agreements, Boehm said he doesn't expect its distribution deals to change. "Everyone was really happy," Boehm said, when he told them about the new owner at Sterling's sales conference last week. Sterling also has a licensing deal with Hearst Books, another arrangement Boehm said will remain as is. In addition, Sterling is set up to be a category management captain at Borders. Boehm said he hoped that would not change. "Hopefully, it will not raise their competitive spirit to the point where they may walk away," he said. Borders executives could not reached for comment last week.

Originally, Boehm said he had wanted to buy out partner Burton Hobson, who has not been involved with the day-to-day operations for some time. But he found raising capital to be difficult, and so set out about six months ago to find a buyer. In B&N, he said, he had the answer: "They're a very paternalistic company. I can't imagine a more perfect partner."