Pegasus Wholesale has reeled in many major Canadian publishers despite its steep discount demands, believed to be 50%.
At least 13 publishers have signed with Pegasus, including McClelland & Stewart, Stoddart/General Publishing and Kids Can Press as well as Key Porter Books, Raincoast Books, Douglas & McIntyre and Canadian Manda. Publishing companies still in talks with Pegasus include Random House of Canada, HarperCollins Canada and Penguin Books Canada.
Chapters is trying to quell fears that publishers who do not deal with Pegasus will be bullied by Canada's largest bookstore chain--which has a 72% interest in the company. Chapters spokesperson Helena Alto told PW that Chapters is continuing to order books from many publishers that have not finalized negotiations with Pegasus.
"We are ordering in a multitude of different ways, either directly from publishers or from other wholesalers, such as North 49. Not all Canadian publishers and distributors have yet reached an agreement with Pegasus. We obviously need to get the books in stock into the bookstores, so we certainly have made alternative arrangements," Alto said.
Yet Random House, which has not signed on the dotted line with Pegasus, is currently reevaluating its relationship with Chapters. Brad Martin, executive v-p of Random House of Canada, was elusive when asked if the discussion was at all related to the publishing house's relationship with Pegasus.
HarperCollins Canada president Claude Primeau sounded more upbeat, saying he hopes to soon have a working relationship with the wholesaler. Primo was confident that Chapters would continue to carry HC's books regardless of any deal with Pegasus. "We're trying to come up with a deal with Pegasus satisfactory to their interest, but having the interest of HarperCollins first and foremost," Primeau told PW. "The objective of the exercise is to sell books... Negotiations are never easy, but at the end of the day, everyone has to come through with a working relationship."
Jack Stoddart, whose company, Stoddart Publishing, has already signed with the wholesaler, d s not see what all the fuss with Pegasus is about. "Frankly, I don't see much difference between [Pegasus] and when it was Chapters Distribution. Our terms are not dissimilar to what they were then, so it wasn't a hard thing to do," Stoddart said.
Then again, many publishers may just be trying to take the best out of an uncomfortable situation. As Primeau jokingly summed up: "They ain't going away--they're here to stay. It's a question of the rules of the ball game."
Investment Firm Takes 15% Stake
In a new financial arrangement, Canadian General Capital Limited, an investment company that buys stakes in companies with high growth potential, has purchased a 15% share in Pegasus for approximately C$7.5 million (about US$5.1 million). Canadian General Capital and its institutional shareholders also own some 16.3% of Chapters Inc.
