Risky business

For those who think the book trade has become a “steady as it goes” sector, I have some news for you. In February, Bertrams, the UK’s second- biggest book wholesaler, was sold to private equity backer Aurelius for half the sum it originally bid for the business (which itself seemed like a knock- down price for a business with sales of more than £200m); last week the UK’s biggest high street book chain Waterstones was sold to activist investor Elliott Advisors for a sum thought to be considerably less than its Russian owner Alexander Mamut once wanted; and this week the UK’s biggest printer of black and white books, Clays, with sales of £77m, was sold to Italian printer Elcograf for £23.8m. If this is steady, bumpy must be fun.

The common denominator is print—the producing, moving and selling of physical books that has been the hallmark of this sector for more than 200 years, and on whose fragile form much now rides. That these businesses are attracting investment remains a cause for cheer; that they were up for sale at all must surely be a cause for alarm.

There are positives, of course. As I note in my longer piece on the Waterstones sale, Elliott Advisors could prove to be the bridge to a better place for the chain, with m.d. James Daunt ready to continue his revitalisation of the business. Bertrams and Clays are at different stages, but both will benefit from focused ownership and the investment in time and money that should follow. Meanwhile, the Nielsen BookScan-measured market continues to grow, up 0.9% in volume and 2.1% in value on the same period in 2017, even holding up well against 2016, despite the changeable weather and economic climate.

Furthermore, books have shown themselves to be a remarkably resilient category for retailers as different as Amazon and The Works; they appeal to all demographics, and to readers at all stages of their lives; they are inexpensive yet desirable, coveted yet throwaway; they can be bought, borrowed and gifted; and can educate, entertain, infuriate, console, escoriate and venerate. Sometimes at the same time. There are also plenty of them—close to 200,000 new or revised editions are printed each year, to add to the millions already available. But we are at the beginning of a long-term and irreversible change in how readers consume and buy content, whether they shop online or on the high street, and whether they demand that content immediately or not. Venture capital is short term, it will want quick returns from a market that is inherently slow and conservative, at a time when costs are increasing and prices are constrained.

The challenge will be to stay the course—the risk is that the ground beneath us changes.