Bloomsbury reports slump

Harry Potter publisher has high hopes for 2007

Bloomsbury Publishing PLC, the British publisher of the Harry Potter books, reported a huge slump in 2006 annual profit on Tuesday, but forecast improving earnings in 2007 when the final installment of the books about the boy wizard is due for release.

This image released by Bloomsbury Publishing, Wednesday, March 28, 2007, shows the adult edition book jacket for Harry Potter And The Deathly Hallows that will be published on July 21. The adult edition has a photograph of a locket bearing a serpentine “S” – believed to be the “horcrux” in which the Lord Voldemort keeps a fragment of his soul. The cover for the children’s edition released by Bloomsbury Publishing PLC, Rowling’s British publisher, shows a grown-up-looking Harry, Hermione and Ron. The U.S. edition will have different illustrations, Bloomsbury said.

The publisher issued a profit warning in December, blaming weak sales in the pre-Christmas period and delays in sealing a number of key contracts. Books by chef Heston Blumenthal and teenage Olympic boxer Amir Khan were among those with disappointing sales.

Chairman Nigel Newton said “2006 was a challenging year,” but that “2007 has got off to a good start with a number of books already in the best-seller lists.” Newton said several contracts for reference publishing rights were currently under negotiation.

Bloomsbury is under pressure to find new sources of revenue as the Harry Potter series draws to a close _ the seventh and final installment. “Harry Potter and the Deathly Hallows” is due for release on July 21.

The novel hit the top of online bookseller Inc.’s British best-seller list just hours after author J.K. Rowling announced the title in a puzzle on her Web site in December.

All six previous books, which are published in the United States by Scholastic Corp., have been No. 1 best-sellers, selling a combined total of more than 300 million copies worldwide and translated into 47 languages.

They have also spawned movies, computer games and other merchandise, and Bloomsbury has so far been able to capitalize on their success even in years without a new release by issuing paperback editions or new language imprints.

The publisher intends to extend that strategy after the final release by printing a paperback edition 12 months later. It also plans to launch a box-set edition of all the volumes and continue to launch editions to coincide with the film releases, the fifth of which is also scheduled for July.

However, Bloomsbury is aware that the Potter franchise may be reaching saturation point.

Newton said the firm now has a growth strategy in place that includes developing new authors, internet-based initiatives, and acquisitions, “all of which we believe will enhance and strengthen our position as a leading publisher.”

This year’s earnings should also be given a boost from a second book by author Khaled Hosseini, whose first novel, “The Kite Runner,” sold more than a million copies.

Bloomsbury also said it was heartened by a 36 percent rise in sales at its U.S. unit, where it plans to expand its history, science and business publishing. The company said that a number of best-sellers, including Al Gore’s “An Inconvenient Truth,” helped make 2006 a “particularly good year” for nonfiction books.

Bloomsbury shares fell 3.3 percent to close at 185.25 pence ($3.66) on the London Stock Exchange.

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