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Agents look for turning point as profits take a tumble
01.01.70 | Catherine Neilan
Literary agents have seen their profits tumble, with the recession, dwindling advances and publishers' focus on celebrity cited as contributing factors. The split at PFD, which led to the creation of United Agents (UA), also hampered the performance of the two agencies involved, while an expansion in staffing costs affected both Curtis Brown and Aitken Alexander.
The largest loss was incurred by UA, which in its start-up year to end-2008 made a loss of £2m on sales of £6m. According to Simon Trewin, UA's head of books, "Such a loss always formed part of the financing plan" for the creation of UA. "As we become more established we have fewer obligations connected to a start-up. Specifically, the resolution of the circumstances of our start-up involved a heavy one-off professional services bill."
Trewin dismissed concern expressed by the firm's auditor that the agency was reliant on "the continued support" of its banks to continue trading, stressing the comments, made on its accounts, were "quite standard especially for newly set-up companies". He added UA had undertaken the repayment of its bank loan "as per [the bank's] financing plan".
PFD fared little better in 2008, a period in which it lost some 80 people, many of whom joined UA, and was subject to a management buyout. Though it does not submit full accounts, it appears to have made a loss close to £1m.
Caroline Michel, chief executive, said the year was "not representative" of the agency going forward. "We lost half our business [in 2007], so we have built the company back since," she said. "And for 2009, we have had a year of stability and profit which, given the state of the market in all sectors, is a terrific achievement on behalf of everyone here."
Over the same period abbreviated accounts submitted by Sheil Land showed it made a loss close to £75,000, while A P Watt made a profit just shy of £250,000.
More recent results filed by Curtis Brown show that it made a loss of £13,710 over the year to end-February 2009, compared with a profit of nearly £200,000 previously. The company's turnover increased by more than £430,000 to £5.8m, but there was also an increase in staff costs of nearly £600,000 with staff numbers up from 61 to 70. Aitken Alexander made a profit of £62,000, less than in its previous year, a performance which joint m.d. Clare Alexander said came as a result of hiring three new agents and opening a small office in New York.
But Alexander also blamed the downturn on the medium-term trend of publishers eschewing literary authors for celebrities: "Publishers' focus has been on celebrities, and most agents play very little, if any, role in that," she said. "I think we are at a turning point now. The search for good writing is still on in most of the world, and in some of England too."
Michel said she also recognised the factors cited by Alexander, but said PFD was now "building brands where we couldn't before" across a variety of all media. "There has never been more opportunity than there is now," she added.
This article has been amended. Aitken Alexander registered a post-tax profit of £62,000 in the financial year ended 31/3/2009, and not as reported a loss of £850,000 in the original version of this news report.
The purported £850,000 loss was based upon an inappropriate reading of the accumulated profits of the company, as registered on the balance sheet of Aitken Alexander's abbreviated accounts, which were adjusted between 1/4/2008 and 1/4/2009, and which in fact have no bearing on the operating profit or loss of the company.
Furthermore, Clare Alexander's comments in the same news report, regarding the agency's expanded operations, were intended to explain its relatively low profits for the last financial year (the agency has traditionally made a profit of no less than 20% of turnover).
The Bookseller extends it apologies to Aitken Alexander and is sorry for any confusion caused.