Waterstones sale expected to complete this month
The sale of Waterstones to hedge fund Elliott Advisors is likely to close at the end of this month, The Booksellerunderstands. The looming deal has caused a delay in increasing the pay of senior booksellers, after junior staff saw their salaries rise with the increase in the National Minimum Wage.
A source with knowledge of the situation, who wished not to be named, said they believed the deal was on track to coincide with Waterstones’ financial year end on 30th April.
Elliott Advisors is the UK arm of the American hedge fund founded by c.e.o. Paul Singer. Sky News reported in January that the firm was one of a small number of bidders to have lodged formal offers to buy the bookselling chain and had been granted a period of exclusivity, albeit for a sum “far lower” than the £250m speculated by previous reports.
Elliott Management has not responded for a request for comment from The Bookseller, while Waterstones’ managing director James Daunt has declined to comment.
Waterstones’ current owner Russian oligarch Alexander Mamut put the business up for sale in October, handled by N M Rothschild.
The Bookseller understands the proximity of the sale has caused a delay to increasing the pay of senior booksellers at the chain. The situation has led to some disquiet among senior staff, who were not given a pay rise at the same time as their junior colleagues when the National Minimum Wage rose to £7.83 an hour for those over 25-years-old on 1st April 2018. The situation has meant there is currently little difference between what booksellers and senior booksellers are being paid.
One, who wished not to be named, said: “We’re in a position where senior booksellers with years of experience are now being paid the same as booksellers who started just before Christmas as temps. It feels like our skills, knowledge and expertise count for nothing.”
However, Daunt told The Bookseller he was confident senior staff would get a pay rise this month and the increase would not need to wait for the new owners.
“I have been unequivocal in stating that a pay rise for Senior, Lead and Expert booksellers will be given,” he said. “It does require approval but I am confident this will be in plenty of time for the April payroll. It will not have to wait for the new owners.”
Mamut has owned the chain since 2011, when he bought it for £53m from the HMV Group. Paul Singer’s son Gordon Singer runs the London-based Elliott Advisors, which currently owns a stake in retailer Game Digital.
The firm is known for “taking aggressive activist positions in a string of major public companies”, according to Sky News and has helped to drive up the acquisition price of deals including Steinhoff’s bid for Poundland, reported the Financial Times, which also said the company had been criticised for being “overly aggressive, a ruthless opportunist, even a bully.” However, the newspaper also reported the firm had “established a reputation as one of the most successful activist funds across Europe”. In 2016 the UK arm’s profits jumped from £3.7m to £4.7m, reported the Daily Mail and it has recently hired Paul Best, previously managing director at Warburg Pincus, to focus on private equity deals. When Elliott Advisors briefly opened its main fund to new investments last year, it raised $5bn in 24 hours, according to the Financial Times.
Waterstones’ financial performance for the year to April 2017 showed that pre-tax profit was up 80% to £18m, although sales were marginally down by 1.3% to £403.8m.
Daunt has previously indicated he wanted to stay on at the helm of the chain following the sale.
Amazon and Brexit fuel territoriality fears
The increased visibility of international editions on Amazon’s Global Store is fuelling fears that the retailer’s approach is incompatible with local rights-based publishing.
The concern comes amid recurring gripes about US editions being presented for sale on the retailer’s UK site. Separately, there are worries that a possible change to intellectual property (IP) law post-Brexit could remove safeguards against publishers’ export editions being resold in the UK.
Regarding Amazon, publishers say the retailer is “slow” to take down listings of US editions, which are increasingly finding their way onto Amazon.co.uk. This means that, in cases where the UK and US rights are split between different companies, the US publisher gets the revenue for the UK sale. One indie publisher commented: “It definitely affects us, because people tend to click on the first edition that comes up, and we inevitably lose sales… I spend hours contacting Amazon about things like this, and it is slow to respond—if it ever does.”
Another added: “American editions often crop up ahead of UK editions, even if the books should be market-restricted. I understand that it must be difficult for Amazon to keep track of every single product uploaded on its system, but it must make sure that if contacted by publishers, it responds quickly. It’s a mess, really.”
An Amazon spokesperson said it “has proactive processes in place to identify and remove US editions of books from sale on Amazon.co.uk where the sale of that US edition would infringe the rights of the publisher of a local edition of the same book. We also have an established process which enables third parties, including rights-holders, to provide us with notice of infringements or non-compliant products. We respond rapidly to any such notice.”
Meanwhile, a possible change to IP law post-Brexit could change the rules about the sale of export editions—potentially at lower prices—back into the UK market. Currently the UK subscribes to a “national” or “regional” exhaustion of rights, governing the sale and resale of books within the EU. However, the UK could shift to an “international” exhaustion of rights after Brexit, with sales implications.
Shireen Peermohamed, partner at law firm Harbottle & Lewis, explained: “That would mean that if a printed book is on the market anywhere in the world with the copyright owner’s consent—the US, Norway, Japan—the copyright owner will, in most cases, not be able to stop it being resold in the UK. I suspect that rights-owners will be thinking hard about this and the need to make a strong case against the international exhaustion of rights.”
PA unveils 10-step Brexit blueprint
The UK Publishers Association (PA) has urged the government not to “trade away” the key principles that underpin the book trade as the country gears up to leave the EU.
The Publishers Association has released a 10-point blueprint for Brexit to The Bookseller Daily ahead of presenting it at the London Book Fair today (10th April), with the top priority for publishing houses being to maintain access to global talent and ideas. PA chief executive Stephen Lotinga said the UK has been “the world’s publisher” for more than 300 years, adding that the principles that have enabled it to thrive—free access to global talent and ideas, a strong system of intellectual property rights, freedom of speech and freedom to publish—”must not be traded away during negotiations in the broader interests of striking new fair trade agreements [FTAs], either now or after we leave the EU”.
The PA warned that the US, China and India have “different approaches” to intellectual property laws than the UK (including copyright and exhaustion of rights) along with independent positions on issues such as freedom of speech, data protection and digital trade, which could be viewed by foreign trade negotiators as “bargaining chips” in future trade discussions.
As such, the PA is demanding the government be “steadfast” in supporting and improving the UK’s Gold Standard copyright framework after Brexit, along with ensuring quality control through “national exhaustion for intellectual property”. Maximising publishers’ ability to export to all markets and leading the way on rights enforcement are also important, along with enabling cross-border data flows. Commitment to free speech and freedom to publish is vital to ensuring publishers’ continued success after Brexit, and the PA would also like to see a zero rate of VAT applied on digital publications (e-books have 20% VAT applied, whereas print books have zero), along with “fair online markets”.
“Britain has been the world’s publisher for more than 300 years. From Jane Eyre to Harry Potter and from On the Origin of Species to A Brief History of Time, works published in Britain help to shape our national identity and the way others see us around the world— and they underpin our £92bn creative industries sectors here at home,” Lotinga said. “Our sector’s success is supported by certain things which enable it to thrive… These must not be traded away.”
Lotinga will discuss the blueprint on a panel at LBF today with Baroness Fairhead CBE, minister of state for trade and export promotion at the Department for International Trade; Lis Tribe, group m.d. of Hodder Education and president of the PA; and Miriam González Durántez, co-chair of international trade and government regulation at Dechert LLP. Publishing is one of the UK’s most valuable export sectors, supporting more than 70,000 British jobs and generating a £1.1bn trade surplus annually, the PA claims, with 70% of current exports going outside the EU.
The PA’s 10-point Brexit blueprint
- Maintain access to global talent and ideas
- Support and improve the UK’s Gold Standard copyright framework
- Commit to free speech and freedom to publish
- Maintain a sustainable approach to Open Access policy for research
- Ensure quality control through national exhaustion for IP
- Maximise the country’s ability to export to all markets
- Lead the way on rights enforcement
- Enable cross-border data flows
- Zero rate VAT on e-publications
- Ensure fair online markets
Simon Mayo Book Club to end
Broadcaster Simon Mayo has announced that his book club on BBC Radio 2 is to end.
The news appears to be a result of scheduling changes to Radio 2 which will see Mayo partner with Jo Whiley on a new show from May. The BBC has confirmed that the Book Club will continue on BBC Radio 2 as part of Sara Cox’s new show, which will launch on Monday 14th May and will be broadcast Monday to Thursday, from 10pm to midnight.
Speaking on Twitter, Mayo said: “Proud of all the amazing books we covered on the R2 Book Club. Thanks to all authors, PRs, publishers, the Reading Agency, reviewers and listeners who made it happen.”
Mayo’s book club started in 2010 and since then he has interviewed numerous high-profile authors including JK Rowling and Peter May.
Listeners to the show have lamented the end of the book club, as have publishers.
Alison Barrow of Transworld said: “Thank you for putting so many books on the radar for your lively and smart radio audience. It’s been brilliant.”
Author Joanna Cannon said: “Very proud to have been chosen for @R2BookClub earlier this year. Genuinely one of the highlights of my writing adventures. This makes me so sad, but a huge thank you to @simonmayo and the team for supporting so many authors, and for doing it so brilliantly”.
Katie Brown, commissioning editor at Trapeze, said: “I am so sad about this thank you @simonmayo @schmotime for all your book love. Can someone take up the mantle?!”
A petition has been started to convince the BBC to halt its changes.
Petition creator Heather Hayward said: “As a busy working mum of four children, sitting down to read a book is sometimes a challenge. However, listening to the Radio 2 Book club feature on Simon Mayo’s drive time show on my way home inspires me to often pick up the featured book and make time to read. It provides a great platform for up & coming authors to be heard, and I believe helps to the nation to come off their phones/gadgets and get reading.
“The changes to the Radio 2 schedule means that the Book club is no more. We the undersigned would like Radio 2 to reconsider this decision and help to keep the nations interest in reading!”
Last month, BBC Radio 4 aired the last episode of arts show “Midweek”, following scheduling changes from the station that includes the creation of two new arts programmes.