Harry Potter has cast a spell over the recent fortunes of Bloomsbury but, for the first time in five years, the UK's last remaining stock market-listed book publisher is without a new installment of the boy wizard's adventures.
Chief executive Nigel Newton yesterday confirmed that the fifth of JK Rowling's phenomenally successful books - Harry Potter and the Order of the Phoenix -will not appear before the end of the year.
"Joanne is happily writing away, but the new Harry Potter will not form part of our 2002 financial year," he said. "The publication date of the fifth book will be announced after it has been delivered." Although there is no suggestion that Ms Rowling will not complete her seven-book deal, the absence of Bloomsbury's annual banker has unnerved some investors.
Its shares have proved among the most resilient of the media sector, but have still fallen by 39% since May. Analysts estimate that 50-60% of annual turnover comes from the Harry Potter franchise.
But Mr Newton insists that any fears that Bloomsbury is a one-product company are wildly overblown. Since it became apparent in 1997 that Harry Potter and the Philosopher's Stone had the potential to be an international best seller, Mr Newton has been studiously investing the cash it generated in anticipation of the day when his company could no longer rely on another sequel.
Interim results published yesterday revealed what those investments have been. In the last six months alone Bloomsbury has bought four smaller rivals - dictionary publisher Philip Collin, Whitaker's Almanack, Thomas Reed Nautical and the Poysers natural history list. Each operates in the reference market, a less sexy end of the trade than the fiction sector in which Bloomsbury has made most of its money.
The four companies cost a total of just £2m, but Mr Newton thinks their impact on the wider business will be far greater. He says the content owned by each business is underexploited, and he has plans to not only publish more books but distribute the reference material through the internet and CD-roms. It was the same logic that in 2000 led Bloomsbury to pay £16.4m to buy A&C Black, publisher of the Who's Who directory and Blue Guide travel books. "We have used our financial resources to make selected acquisitions in areas where we believe we can add real value," he said.
But Bloomsbury is just a small player compared to industry leaders like Penguin, Harper Collins and Random House.
Mr Newton, a Californian, founded the group in 1986, shortly after his first enterpreneurial foray - producing the book to accompany charity concert Live Aid. He and organiser Bob Geldof took the book to the high street in record time.
Imbued with a new self-confidence, the then deputy managing director of publisher Sidgwick & Jackson decided to set up on his own. Bloomsbury listed on the stock exchange in 1994 and, at today's valuation of £103m, Mr Newton is worth £5m. In the six months to June 30, it recorded turnover of £24m and a pre-tax profit of £3.1m.
Despite its small size the company has already earned its spurs in the interactive arena. An unsolicited email from Mr Newton to Bill Gates in the late 1990s led to the creation of the Microsoft Encarta English Dictionary, a book and multimedia product expected to generate sales of £40m over the next decade.
Bloomsbury's latest big multimedia product is The Business: the Ultimate Resource, a financial reference project that went on sale yesterday. Priced at £40, the book is described by Wall Street Journal as "the most ambitious business book ever". It has taken three years to put to gether and sales are forecast to emulate those of Encarta. Contributors include Edward de Bono, Charles Handy and Meredith Belbin. The sales strategy has been to license The Ultimate Resource in as many territories as possible - the contract Bloomsbury has signed in China is one of the largest in the country's history - and then sell the content to websites and personal organiser makers. Economist.com has bought non-exclusive electronic rights, while Palm plans to sell material to its handheld organiser users.
Mr Newton has been careful, however, not to dilute Bloomsbury's reputation as a publisher of eclectic fiction. Editors at Bloomsbury's head office, a town house in London's Soho Square, may at times be frustrated that Harry Potter always grabs the headlines - but its commercial success has enabled them to punch above their weight when bidding for books.
In the last six months investment in royalty advances for future unpublished titles rose 50% to £10.7m. "We are pursuing more and bigger titles," said Mr Newton.
The group's newfound clout will be underlined on October 28, when it publishes the Little Friend - the second novel from Donna Tartt - which drew interest from all the big houses. She wrote the Secret History, an early 90s sensation, and Mr Newton expects it to be a best seller. "It will be the lead title in virtually every chain," he says. He is also optimistic about Middlesex, a novel by Jeffrey Eugenides. "It has the makings of a classic and we think it will be very, very big indeed.
Yet Harry Potter still dominates the business. There has been no new book but Bloomsbury made more money out of the franchise than last year. If Ms Rowling delivers in time for the next financial year, analysts' forecasts will reflect the expected revenue change - and it doesn't take a magician to work out where the cash will go.
