The U.K-based Quarto Group reported gains in sales and earnings for the first six months of 2011 and also announced that it has acquired the U.K. publisher Frances Lincoln Ltd.. Total revenue rose 5%, to $72.5 million, and operating profit increased 7%, to $2.7 million. Sales in the publishing division rose 3%, to $51.6 million, and were up 12% in the co-edition segment, to $21.0 million. Quarto said results in the publishing division benefitted from its purchase of Cool Springs Press as well as good performances from Lifetime in Australia, Rockport, CPi, and Walter Foster in the U.S., and Aurum in the U.K. The international co-edition division increase was due in part to the release of more titles.
The purchase of Frances Lincoln doubles the size of Quarto’s U.K.-based book revenues and is in keeping with the company’s strategy of expanding through strategic acquisition. Quarto paid £4.5 million in cash for Frances Lincoln, which publishes gardening, horticultural and other outdoor activity books as well as children’s titles. It also has a distribution business, handling sales and fulfillment for a number of third-party publishers that Quarto expects to link with the group's existing sales and distribution activities, and will handle titles from its U.S. imprints in the U.K. and continental Europe. For the year ended March 31, 2011, Frances Lincoln reported an audited profit before tax of £619,000, net assets of £3.8 million and gross assets of £5.9 million. John Nicoll, the managing director, will remain at the helm for a transitional period. David Graham, who heads the Aurum group and the launch of the new Union Press imprint, will head the transition team.
In his always thoughtful comments to shareholders, Quarto chairman Laurence Orbach remained optimistic about the future of the book market. “It is simply wrong to portray the book industry as being in decline,” he said in his letter to shareholders. He acknowledged the challenges faced by declines in bricks-and-mortar stores, and said publishers will need to continue to find new channels to distribute their titles, something that Quarto has had success with in the past. What will be key, Orbach said, will be for publishers to find ways to market titles to the attended audience and said more money needs to be allocated to marketing to find new initiatives.
“Most book publishers have been working diligently to test new marketing approaches. The results, from observation, and our own limited experience, have been equivocal,” Orbach wrote.” For example, advertising our special interest titles in electronic media has been pretty unrewarding, even when focused in highly targeted specialized blogs and portals; by contrast, advertising in specialized print media remains a viable approach to generate awareness and sales of our titles. Social media has not produced the interest and outcomes that we, and others, hoped for from such exposure. Will this always be so? Undoubtedly not but, for the moment, we read the facts as we see them.
To date Quarto, with its heavy emphasis on color and illustrated books, has seen relatively little revenue from digital products, but Orbach said that it expects digital revenue to represent over 1% of worldwide sales in 2011 as Quarto expands its presence on a variety of digital platforms. Broach warned however that “enhancing existing titles will always be costly and, if the medium is to take off for illustrated books, these will have to be created especially for e-readers, rather than being routinely converted from existing titles.”
Even while Quarto prepares for digital expansion, Orbach defended the value of the printed book: “We don't endorse the somewhat fashionable concept that the printed book is simply a "container" for its content; in this centenary year of Marshall McLuhan's birth, his insight that "we shape our tools, and thereafter the tools shape us" helps explain why we have so many different kinds of media, and why "the book", as a means of editing and organizing ideas and content, will remain alive and well in something resembling its existing form, and distinct from other media. Discussions about the disintermediation of publishers, and the vitality of self-publishing, make for lively debate and fulsome commentary; the strong likelihood is that the outcome will be far less revolutionary.”
“There has been much over-excited commentary about the digital revolution. This discussion is generally well intentioned, but the more apocalyptic essayists are only treading a well-worn path that others have followed almost since the earliest days of printing, when books held a near monopoly of reading material. This isn't the place to rehash, in detail, the long story of the emergence of "competing" media, such as newspapers, serial publications, i.e. magazines, movies, radio, television, and so on. In the face of this competition, book publishing flourished, adding to the size of its audience, and to the output of new titles. It's enough to remember this to sense that the current new challenges are part and parcel of an evolutionary story.”
