| BUSINESSWEEK ONLINE : JULY 17, 2000 ISSUE | ||||||||
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| INTERNATIONAL -- EUROPEAN BUSINESS
Harry Potter and the Tower of Profits (int'l edition) The hoopla has British publishers jealous--and alarmed The index for London's big stock exchange is down 8% for the year. All those new dot-coms that gave British investors such a thrill in January--well, they turned into near-worthless paper come June. But stock-pickers in the City have a new darling--that bespectacled kid wizard Harry Potter, fourth-form student at the Hogwarts School of Witchcraft & Wizardry. Shares in Bloomsbury Publishing PLC, publisher of the bestselling Harry Potter series, have managed an act of levitation worthy of Potter himself: At nearly $14, they're now three times what they were a year ago--and an otherworldly 60 times earnings. Absurd? Well, yes. But it's one more sign that the Harry Potter phenomenon, based on the books by J.K. Rowling, has built into something far bigger--a sort of publishing equivalent of the Super Bowl. With the July 8 publication of Harry Potter and the Goblet of Fire, No. 4 in the series of schoolboy adventures of young Potter and his wizard pals, Britain and America are about to embark on a frenzy of marketing. The new one is the biggest first-run printing ever in publishing: 1.5 million copies in Britain, 3.8 million in the U.S. The uproar has created something unusual in the clubby world of British publishing: a bestseller circus that the Brits previously thought only vulgar Americans capable of perpetrating. At its center is Bloomsbury, a smallish publisher with a reputation for nurturing such classy authors as Michael Ondaatje and Nadine Gordimer. Now, reporters are battering Bloomsbury chief Nigel Newton with questions about his Potter strategy and its impact on the soaring stock price. With nearly 70% of the staff holding shares, many in the industry desperately want to know just how many staffers have become Potter millionaires. Stunned, Newton--a transplanted Californian who runs the shop from a 17th century townhouse on Soho Square in central London--no longer has time to handle all the press requests. But so far, the bet on Harry is paying off handsomely. The series accounted for an estimated 20% of Bloomsbury's overall sales of $34 million last year and has doubled revenues and profits since 1998. Goblet, at $25 a copy, could push this year's sales to $50 million, one analyst says, which would lift pretax profits by more than 50%, to $6.4 million. And there are three more books in the series. Newton won't discuss Rowling's advance, but rivals say it could have been as low as £1,000. Rowling is now worth some $24 million. BIG SECRET. Although Newton is mum about profits, he's displaying an American knack for showmanship in promoting Goblet. He shrewdly kept the title secret until the last possible moment. Now, the launch dwarfs anything the publisher has ever done. Bloomsbury and Potter's U.S. publisher, Scholastic Inc., have arranged a series of pre-launch publicity events around the July 8 launch, including a four-day book-signing train ride across Britain. Special midnight bookstore openings are planned in Britain and the U.S. Bookstore parties will have live owls (they act as messengers in Harry Potter's world--delivering letters called Howlers, which--well, just read the books). ''There has never been a book that performed like this,'' says Scholastic Editorial Director Arthur A. Levine. With 35 million Harry Potters in print around the world, the risk is that the brand loses the magic. Warner Bros. has plans to make the movie, and, along with Mattel Inc. and Hasbro, has the merchandising rights as well--which means more Potter T-shirts, wizard capes, wands, and quidditch broomsticks (read the books) than anyone ever imagined. Again, the British are alarmed at the Yankee-style hoopla. Says Chris Wood, managing director of London brand-development agency CLK.MPL Ltd. ''The books are a bit too subtle for conventional marketing.'' Maybe so. But let's face it--crass marketing could help those stock options. By Kerry Capell and Heidi Dawley in London _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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