The Corner Office: Growth Through Acquisition
As a number of small, independent publishing houses struggled to survive over the last year-and-a-half, Nashville, Tenn.-based Turner Publishing, an independent publisher of specialty and trade titles, found itself presented with an opportunity: It could invest in its future by taking the bold step of acquiring other publishers that were seeking help, thereby growing its own assets, or it could play it more fiscally conservatively and stand pat.
It chose to strike while the iron was hot.
In February 2009, Turner acquired the remaining inventory and the rights to publish 431 titles from Cumberland House, a small, private publisher. The titles it acquired are in a variety of categories in both fiction and nonfiction, and include gift books, cooking, history, health, sports, entertainment and regional titles.
More recently, in March, Turner Publishing reached a publishing agreement with Provo, Utah-based Ancestry.com, an online genealogy resource. As a result of the agreement, Turner took over most existing inventory and related publishing contracts from Ancestry Publishing, a division of Ancestry.com. It acquired more than 100 Ancestry Publishing titles and limited use of the Ancestry.com name for publishing purposes.
Titles from both acquisitions are now available at TurnerPublishing.com and other select online retailers, as well as bookstores nationwide.
Todd Bottorff, president and publisher of Turner Publishing, spoke with Book Business to discuss how these acquisitions have impacted his company's business, as well as his views on the emerging e-book marketplace and what it means for the futures of Turner Publishing and the book publishing industry as a whole.
How have the acquisitions of Ancestry.com and Cumberland House impacted Turner Publishing's business?
Todd Bottorff: Our strategy is to provide valuable books, and to service authors and customers well, with an emphasis on quality production and compelling marketing. Those acquisitions have been a helpful addition to our list. And the customer bases and marketing overlap nicely with the capabilities that we have. We've been able to seamlessly bring those books into our business model, and sell and market them effectively.
How have you integrated these acquisitions into your current business?
Bottorff: It's been very smooth. Now that we've done [acquisitions] a couple of times, we have a model and experience doing post-acquisition integration. It actually wasn't our intention to be doing acquisitions; but after we were presented [with] the first one, we realized that it's something where we can provide a good solution for other owners of publishing assets.
We've got a model for the types of books that we're looking to bring into our catalog. But as we bring these assets into our platform, we can enhance the value of them through great marketing and great sales channels.
Did the difficult economic climate make Turner Publishing hesitant to make these acquisitions?
Bottorff: I wouldn't describe it as being hesitant. I would say we were focused on publishing great new books. And when people saw the quality of the platform that we have, they saw that it made sense to sell the assets to us because we can provide a great home for authors.
How do e-books fit into Turner Publishing's business model now and going forward?
Bottorff: The strategic shifts that are happening in the industry related to e-books are one of the most exciting components of the business. E-books are an integral part of our program going forward. In addition to that, there are other offerings, in the form of apps, that we believe can even be the next phase beyond the e-book revolution. We're very focused on adding e-books as a distribution channel for our content to our end users.
What are your overall impressions of the publishing industry in regard to print versus digital?
Bottorff: The entry of this new technology is going to have both positive and negative effects for publishers. But the effects will be significant. The challenge will be to take advantage of all of the wonderful things that e-books can offer, while minimizing the negative effects it's going to have on our business.
We're extremely excited and optimistic about the strategic landscape for publishing for the foreseeable future, driven by the technological changes in both e-books and apps. We feel like that creates some extraordinary opportunities for independent presses versus the larger, entrenched houses. But, it requires some courage and forward thinking in order for independent houses to take advantage of it.
What may those effects be, both positive and negative?
Bottorff: On the positive side, I think ultimately a more efficient delivery platform for content has the potential to shift the demand curve for books versus other draws on peoples' time. So you're talking about an aggregate market increase in consumption. Number two, the efficiencies of e-books for publishers to distribute globally and to reduce returns provide some extraordinary opportunities. The investment cost for new titles is reduced, which allows publishers to provide a more diverse offering to potential customers.
On the negative side, as there's a channel shift from brick-and-mortar stores to online to e-book, the amount of inventory that's required to be held by the channel goes down. And because that inventory can be returned, there's going to be a drag on printed book net sales. Second, as the cost of producing a new title goes down, the number of competitors goes up because the barriers to entry are coming down. In addition to that, shelf space for e-books is effectively infinite compared to brick-and-mortar stores where you've got a finite amount of space. So in that model, marketing becomes even more critical than it has been in the past.
In addition to the growth of digital publishing, what other challenges confront you as head of an independent book publisher?
Bottorff: When you compare publishing to other industries, it's a business where execution across all functionalities is critical to being successful. And even when you get it all right, you still might not have the final component, which is a little bit of luck. It's a management-intensive business. From title acquisition to production to sales and distribution and marketing, you have to execute very well in all of those areas while maintaining a high level of productivity.