Bonnier looking to acquire, plans fast growth

Bonnier Publishing is on the scout to acquire other publishing companies as it seeks to double its revenue to £100m over the next two years.

The UK-based English language arm of the family-owned Swedish publishing giant is planning to grow its output considerably and has a target of making a revenue of £100m across its UK, Australian, US and French markets by 2016, up nearly 100% on its current annual revenue across those territories of £52m a year.

To help it hit the target, Bonnier Publishing c.e.o, Richard Johnson said the company is on the acquisition trail and is looking to expand into adult fiction publishing - an area it has so far barely entered. In preparation for the expansion, the publisher has recruited 39 more employees since January from companies including rivals Usborne, Penguin and Hachette, and plans to recruit a further 11 people before the end of the year, up from a workforce of 240 in May 2012.

Johnson said: “In the last few months we have been getting our house in order, ready to make this big leap. Now that is in place, we have to push on because we would be very disappointed if we don’t make that £100m mark. The growth will come from some of our existing programmes, but also some large acquisitions. We will be looking to acquire in adult fiction. We have just started Blink, our adult non-fiction imprint and we will be piling money into that and growing that ourselves. The only missing piece is adult fiction, everything else is covered.”

When asked if he was near to closing a deal on buying a publishing company, Johnson said: “Watch this space.” He added: “We have undertaken a fairly big research operation over the last few months to look around the UK market. We wouldn’t want to make this statement unless we thought we could back it up.”

He said that of the £100m revenue target, £30-35m will come from the UK, and the rest from its international operations in Australia, US and France. “I’ve said we want to get into adult fiction, but this will be a small proportion of the overall revenue, our main work is in children’s and we will be concentrating on that core children’s non-fiction area,” Johnson said.

Digital is only a tiny proportion of Bonnier’s overall business, so despite the decline in print sales, and doom and gloom about the health of high street bookselling, Johnson said the bricks and mortar channels would continue to be the group’s strongest route to market.
“Digital is not a huge deal for us, of our £52m annual revenue, digital only represents around £1m," Johnson said. “We do not feel it is a doom situation on the high street at all, otherwise we wouldn’t have employed all these people. There are plenty of opportunities in that area. Our core strategy is in bricks and mortar- our core sales are not through Amazon, but clearly this is an area we are looking at trying to target,” he said.

On this topic, Johnson was adamant the Bonnier Group’s well-documented spat with Amazon in Germany  – where it is the third biggest trade publisher – was having no affect on sales in the UK. He also said there was a “strong possibility” the publisher’s English language arm would sign up to the new Kindle Unlimited subscription service when it launches in Europe.

“The simple answer as to whether Bonnier’s dispute with Amazon in Germany is affecting us is - it's not,” Johnson said. “I am very aware of the dispute – it has been building for a while, but it is isolated from us, our relationship with Amazon in the UK is fine.” He added: “Bonnier in Germany have some very high profile authors of adult fiction. They are at the coalface of this and we are not, our profile is different. I am aware of their negotiations, I am not close to them, but as far as I know it has been going on for two months and is coming to a close.”

When asked about his position on working with new business models, such as subscription services, Johnson said: “All the new stuff coming in is fantastic for the industry. It is going to open up everyone’s minds. The problem with the book industry is it is so traditional. People are scared to run it as a business and make a profit. In our group we love all that. Any different way of getting books to readers we welcome.”

Bonnier UK’s latest results on Companies House show that turnover was £6.33m in 2012, up 2.4% from £6.18m in 2011. Its operating profit was £31,733, down from £48, 216 in 2011.

The Bonnier Group had a turnover of $4.24bn in 2010.