Nigel Newton: Is there life after Harry? You can bet your Hogwarts there is

He was told 'trash ruled', he flew in the face of market wisdom and he signed JK Rowling. The rest is a magical tale, Bloomsbury's boss tells John Lawless

Sunday 03 July 2005 00:00 BST

That Harry Potter and the Philosopher's Stone has also been printed not just in Latin, but Welsh, ancient Greek and Irish Gaelic, underlines the huge appeal of the series. Some 260 million copies have been sold of the first book and the four follow-up "HPs", as Harry Potter books are now known in the publishing trade.

In just 13 days' time, the sixth and penultimate HP will be launched in a massive midnight event at Edinburgh Castle. Buyers of Harry Potter and the Half-Blood Prince on 16 July will be joining a queue that stretches to China and back.

How a young girl called Alice Newton came to be first in line is the HP story of the business world. It starts eight years ago with Nigel Newton, chairman and chief executive of Bloomsbury Publishing, gave his daughter a sample chapter from a totally unknown writer, Joanne Kathleen Rowling.

"She came down from her room an hour later, glowing," recalls Newton, "saying 'Dad, this is so much better than anything else.' She nagged and nagged me in the following months, wanting to see what came next."

Plenty in publishing still sniff at Newton delegating the discovery of "JK" to his young daughter. "Anyone who read it would have signed her up," a green-with-envy chief executive at one of London's biggest publishing houses has claimed.

Newton has a different take: "A story has it that eight others turned JK Rowling down - ie, the whole lot." As huge rivals dithered, dallied or had already decided against offering Rowling an advance, Newton sent her a cheque. For just £2,500.

One of his maxims is: "Out of uncertainty comes discovery." Newton certainly didn't have the faintest idea that he had scooped the signature of an author whose sales would, in less than a decade, outgross anybody and everybody who had ever written anything before.

In his very English, decidedly Bloomsbury, rather bookish way, but with a mid-Atlantic accent reflecting his Californian upbringing, Newton is understating: "It was very fortunate for us. We'd only just started to publish children's books in June 1994, and had raised money in a float in July 1997 to raise them further. And we hit it lucky."

That has certainly been reflected in Bloomsbury's share price. Floated at 105p in 1994 - and after allowing for a four-for-one split two years ago - its price on Friday of 376.5p makes it worth 14 times as much in 2005. Last week Newton told shareholders that Bloomsbury had enjoyed a good start to the year - and that is before the new HP hits the shelves.

He admits: "It is probable that HP is a total one-off. There has never been anything like it. It has no disadvantages. It has not skewed the company in any way." And, again, he says: "We are terribly lucky to have our problems."

But it isn't luck. From its beginnings in 1986, Bloomsbury was designed to be very, very different.

Newton says that from his first job in 1979, as assistant to the sales director at Macmillan, he learnt that "to understand 'sales' is a huge strength. You cannot then be blinded by 'The Experts'."

Nobody would have guessed he was driven by such imperatives when he and three other bright stars from book publishing named their new company after a literary circle that in the early 1900s had embraced EM Forster, Lytton Strachey and Virginia Woolf. These celebrated authors would meet at 46 Gordon Square, Bloomsbury, home of Thoby Stephen, Virginia Woolf's brother, to indulge in discussions about art, literature and philosophy.

Newton and his colleagues said they wanted to buck the trend in publishing by being old-fashioned and independent. Their senior managers would be so imbued with quality ideals, they would take time to discuss type size on book jackets with authors.

Their ambitions sounded laughable when set against the mega-merger media mania then being unleashed. Yet they listed on the stock market, notes Newton, in a year in which 200 floats were pulled. "Make a big step in your company's history because it's right for you and it's right for the firm," is another of his maxims. "Not because it's right for the market."

Bloomsbury has been discreetly expanding sideways and appears to be outgrowing the Soho Square HQ it has always occupied. Its corridors are narrow, shelf-packed. But Newton insists that's uniquely comforting for its authors. "These are people who work from their homes. Often, when they come to see their publishers, it is attractive if they are in an 18th-century house rather than a steel and glass monstrosity. Many are far more comfortable with us than with giant multinational conglomerates."

That why authors like Rowling (whose first book won the Nestlé Smarties Book Prize Gold Medal) and the South African-born Nadine Gordimer (winner not just of a Booker but of a Nobel) will probably never desert Bloomsbury. "We were told trashy books would rule the day," Newton recalls. "We publish authors of high quality, whose books frequently become classics, thereby creating backlist revenues."

Newton still holds three million of Bloomsbury's 69 million shares. Two of his original partners are retired, but Liz Calder, who in a previous job is credited with discovering Salman Rushdie, is still publishing director and retains 34,000 shares.

He has added different types of Bloomsbury people, including non-executive director Michael Mayer, whom he describes as "the most brilliant guy I know". Mayer is from his home city of San Francisco and was a friend of Newton's father (a Financial Times journalist). But Newton Jnr happened to meet him on a visit to Jersey. "He's a venture capitalist," he explains, "who brings to us not money but a polymath mind - being able to see things from having been involved in so many different industries."

Seven years ago, he hired Minna Fry from Macmillan, to be head of marketing. "Bloomsbury has won the industry's top award for marketing in three of the last five years," notes Newton, stressing that one award was for the way in which Susanna Clarke's first book, Jonathan Strange and Mr Norrell, came to market last year.

"It was based on getting people to read the book, to see how extraordinary it was. We'd had a sustained campaign in America that included a four-page interview in The New York Times Magazine about the 'the phenomenon that was about to be unleashed'. It went to number one and did well everywhere, being named Time magazine's Novel of the Year.

"The marketing of Harry Potter, however, has been based on protecting our story in advance, so that children can discover it for themselves - and then, of course, tell their friends."

Fry's orchestration of the pre-launch Harry Potter hype astonished rivals - it created a must-have frenzy among children. US first-day sales of the fifth HP, Harry Potter and the Order of the Phoenix, hit an all-time record 1.8 million. Fry delivers HP to retailers in sealed boxes, refusing to allow the stores to open them before midnight on the eve of publication. One US bookseller who dared to peek, and allowed advance publication of the plot in the New York Post, was consigned to delayed deliveries in the future.

It is this kind of marketing that Newton believes will help keep Bloomsbury leading the quality end of the market in the decade to come. "Our mission now is to be at the top of the medium-sized," he says, "rather than at the bottom of the big."

But that really isn't the issue, Mr Newton. It's much simpler than that: is there life after Harry Potter?

There is. For it is the plot which he has hatched for Bloomsbury since 1998 - little more than a year after he signed up Rowling - that makes him stand out so markedly.

His quaintly located Bloomsbury is now a global operation. He has bought his way into the world's other two big book markets. "We are increasing the number of strings to our bow. We have made a number of acquisitions, which are bedding down. The buying of Walker & Co in New York for $6.4m [£3.5m] brought us great strength in a new market. George Gibson [the publisher who has stayed with the company post-acquisition] has developed what is called 'narrative non-fiction'. He has also been buying many exciting books since the acquisition, and they have a stunning children's list.

"Before that, we acquired Berlin Verlag in Germany. So we are now in a position where, when we find really original and outstanding new books, we can benefit from publishing them in the three big markets, instead of just one. The alternative is to do a rights deal. It increases the return for us by a factor of four."

With children's books likely to continue to account for more than half of sales, he has given Bloomsbury two other sturdy legs in the adult and reference markets, buying Who's Who and Reeds Nautical Almanac. Newton also signed up Bill Gates to an electronic dictionary deal, which Microsoft uses to update its own users' software.

Bloomsbury's cash pile will be boosted by 2005 profits of about £20m to just short of £50m. "I would not call it a war chest. But there will be more takeovers. We will look to strengthen our three core areas of children's books, adult and reference books."

Will growth mean that he will have to split his chairman-chief executive role? "As founder of our company, our shareholders embrace the fact I will take a long view. Not be a short-sighted chief executive."

Nigel Newton, who turned 50 on 16 June, is set to outlive HP. But will Bloomsbury survive? "With ease."

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