From fantasy to Freud, Bloomsbury’s independence has worked

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A new 24-volume £1,500 edition of the complete psychological works of Sigmund Freud sits in the book-lined reception room of Bloomsbury Publishing in London. It is next to JK Rowling’s Harry Potter and the Prisoner of Azkaban and House of Flame and Shadow, the latest “romantasy” bestseller by Sarah J Maas.

Freud’s works came with 40,000 titles that Bloomsbury gained when it acquired the academic list of the US publisher Rowman & Littlefield this year for $83mn. Aside from Freud’s interest in fantasy, his works have little in common with those of Maas. But the combination makes sense to Nigel Newton, Bloomsbury’s chief executive.

Newton founded Bloomsbury as “a publishing house, not a publishing conglomerate” and it remains defiantly outside the big five global publishing groups led by Penguin Random House. This resilience is partly due to good fortune: two years after going public in 1994, it signed a debut children’s author called JK Rowling at the mahogany board table it still uses today.

It now publishes two of the most successful authors of modern times: Rowling has sold 600mn books in her Harry Potter series, while Maas’s three fantasy series, including Crescent City, have sold 55mn. Bloomsbury’s share price has risen by about 90 per cent in the past year. In August, it joined the FTSE 250 index, and its market capitalisation reached £615mn last week.

This coincided with its announcement of a 32 per cent rise in first-half sales, buoyed by Maas’s 16-title portfolio. Bloomsbury holds global English-language rights to the author who pioneered romantasy, and she is under contract to write six more. Maas started in the young adult category, but her books now feature what she calls “lots of action and a lot of steamy stuff”.

Bloomsbury was always more financially focused than suggested by the cosy entrance of the twin 18th-century houses on Bedford Square forming its head office. Newton will be 70 next year and has the genially distracted air of a traditional publisher, but do not be fooled. He insists that “we are not accountable to an accountant” but has a sharp financial brain himself.

One starts to get this sense by climbing the staircase that leads to the office’s inner space. It extends Hogwarts-like from its Georgian facade, packed with computers and staff. There are 450 workstations in a 30,000 sq ft space, with 600 employees squeezed in by dividing office working days between its consumer and academic divisions.

The diversification into academia from its first mission to publish trade books of “excellence and originality” is further evidence. New fiction in particular is driven by hits, while more reliable sales come from having a backlist of works by successful authors. To stay in business, a publisher needs stable revenues to offset the inherent volatility.

The Rowman & Littlefield deal is the largest of 34 acquisitions of publishers and lists it has made to solidify its revenues, many of them academic and reference titles. The latter category includes Who’s Who and the Encarta World English Dictionary. “If you create a great dictionary, it will sell for generations,” Newton said. “The revenues keep going if no one comes into the office.”

This has broadened its income and helped to provide steady dividend growth for investors. But keeping up with romantasy is not easy: Maas’s sales have been growing so fast that Bloomsbury’s consumer division is flourishing, while organic academic and professional revenues fell by 14 per cent in the first half. They were affected by a squeeze in higher education spending.

Children, meanwhile, carry on reading Harry Potter, 17 years after the first publication of the last of the series. Bloomsbury would be damaged if parents boycotted them in protest at Rowling’s stand on gender, but it says there is no sign of this. “Most parents are delighted their children want to read,” says Rebecca McNally, publishing director of children’s books.

Newton’s formula for his company’s independence has worked as intended for two decades. But the more valuable it becomes, the more it attracts attention. Simon & Schuster was acquired by the private equity firm KKR last year for $1.6bn after Penguin Random House’s effort to buy it was blocked. Publishing conglomerates still want to consolidate further.

I hope that Bloomsbury keeps defying the trend. It seems to know what it is doing, judging by the results. It may have been lucky, but it has also made the most of its fortune.

john.gapper@ft.com