Barnes & Noble Spends $100M for Specialty Publisher
The nation's top bookseller is following through on a five-year plan to build up it's fledgling publishing business.
Barnes & Noble spent $100M to buy Sterling Publishing, a New York publisher of special interest books, in December. The 53-year-old publishing house produces cooking, gardening, crafts, hobbies, games, and sports titles.
The deal is part of B&N's strategy to expand publishing revenues from 3% of sales today to over 10% in the next five years, says Larry Zilavy, CFO of Barnes & Noble in New York.
Sources at leading independent imprints are concerned about B&N's growing publishing effort. They're worried the retailer will give its titles better placement in stores, hurting sales of independent publishers' titles.
Bookseller sources are worried, too, fearing they'll be denied access to hot-selling titles B&N's publishing group comes up with. B&N officials dismiss these concerns.
CHANNEL CONFLICT POTENTIAL
"Obviously we look forward to building the synergies with Sterling in our stores," Zilavy says. "But we support and encourage [Sterling's] relationship with other stores. [Sterling] will retain its identity and be managed independently."
Sterling officials echo Zilavy's statement. "[Favorable] store placement wouldn't make sense from a Barnes & Noble perspective," says Charles Nurnberg, executive vice president of Sterling. "We were large as an independent, but we're miniscule in any category. Barnes & Noble has 200,000 titles in its warehouse. Sterling has just 4,000."
Barnes & Noble's sole reason for building a publishing business is to increase earnings, and not to compete with suppliers or gain exclusivity, says Steve Riggio, the company's CEO.
Riggio points to Sterling's sales force as a key reason for buying the company. The sales force delivered double-digit increases over the past two years, noteworthy considering economic conditions during that time.
Riggio also notes that Sterling's successful sales department will help Barnes & Noble market its front-list titles to other booksellers.
