In initiatives designed to expand its distribution and marketing capabilities in the U.K., Scholastic has formed a joint venture with and taken an equity interest in the British distributor Book People, and has also appointed a new director to oversee its U.K. subsidiary.
"These three moves are all about strengthening our marketing and distribution businesses in the U.K.," Scholastic chairman Dick Robinson said. He noted that the U.K. "has been more weighted toward publishing than distribution, and we feel the time is right for us to focus more on distribution."
As part of its strategy, Scholastic has paid £12 million ($18 million) for a 15% stake in Book People, an investment that will help finance the growth of the £75-million distributor, which includes building a new warehouse in Wales. The two companies will also link up in a joint venture that will bring together Scholastic's Red House unit with Book People's School Link operation. Red House sells children's books from all publishers to parents via direct mail, while School Link sells adult and children's books through schools. Robinson said Red House has not met Scholastic expectations, largely due to the high costs of customer acquisition. The deal with Book People gives Red House access to Book People's two-million customer base, while Book People will reach 25,000 schools through Scholastic's marketing network. The joint venture will roll out in September and is expected to generate revenues of $12 million to $15 million in its first year of operation.
Book People will continue to be run by its chairman Ted Smart and chief executive Seni Glaister. Glaister, along with new Scholastic U.K. managing director Ian Ronald, will oversee the joint venture.
Ronald, who will join Scholastic August 12, succeeds David Kewley, who is leaving the company after having built Scholastic U.K. from a £10 million publisher to a £45 million company over his 11-year tenure (see Children's, p. 29). Robinson praised Kewley for his contributions, but said Ronald brings more marketing and distribution experience to the post. Ronald's background is entirely in marketing, and he is currently chief executive of the Wine Society, a direct mail and online wine retailer. Robinson said Ronald will not only help guide the joint venture but will "push forward" Scholastic's school book club and book fair businesses. "He's a marketing guy," Robinson said.
