Activist hedge fund Elliott buys Barnes & Noble and puts a well-known UK bookselling executive in charge
James Daunt is perhaps best known for spending the last eight years getting the venerable but once shaky Waterstones (with 283 stores) on its feet. He is once again in the spotlight this week: the New York hedge fund Elliott Management, whose UK arm bought a majority stake in Waterstones in 2018, is now buying Barnes & Noble (627 stores) and putting Daunt in the lead—while he continues to run Waterstones. He’s to move to the US this fall.
Back in 2018, there were worries that Elliott’s ownership of Waterstones might hamper Daunt’s efforts to cut costs and build the UK chain. But it doesn’t appear that was the case; in fact, Daunt has been able to open new stores, show some modest profit, and earn the respect and gratitude of many in the UK industry who want to see the High Street survive.
Thus, response from the UK has been largely approving of the Barnes & Noble news. Charlie Redmayne, CEO of HarperCollins UK, tells The Bookseller, “It is extremely important for the book industry as a whole to have a strong and growing Barnes & Noble. James Daunt has done an excellent job stabilizing and now growing Waterstones back into a profitable and secure business. In my opinion Barnes & Noble will benefit hugely by having him at the helm.” Much public response sounds similarly upbeat.
Daunt chooses his words carefully and enjoys doing so. When Porter asked him at the Jerusalem International Book Forum if it’s true that in some Waterstones locations, staff is allowed to select their inventory (apart from the obvious must-have titles, of course)—so that the booksellers have ownership of the store and do more handselling—Daunt said, “No, this is not true. What’s true is that in all of my stores this is the case.”
Other voices in the UK, however, warn things may not be so sunny in Daunt’s new undertaking. Philip Jones, The Bookseller’s editor and one of London’s keenest observers of the industry, writes, “Daunt’s first few years at Waterstones were troubled. He had pushed and largely succeeded in getting extra discounts from all of the big publishers in return for culling paid-for promotions, including the popular three-for-two deals on paperbacks; he had begun returning huge numbers of books after discovering £20 million [US$25.4 million] of worthless stock hidden in backrooms and under tables across the chain; and had started selling Amazon Kindle devices at a time when publishers were still bruised by the Department of Justice investigation into their agency (fixed priced ebook) contracts.”
In short, Daunt used some tough tactics, the kind publishers complain about with Amazon, to salvage Waterstones. Jones warns the US industry, “Publishers should also take time to understand Daunt’s singular vision. Gone will be the grand plans and corporate double-speak of the current regime, replaced instead by someone whose message will be simple, to the point, sometimes bruising, but effective.”
Bottom line: Waterstones didn’t turn around on happy talk, and as Sheelah Kolhatkar writes in her extensive New Yorker profile, Paul Singer, the head of Elliott Management, is an activist investor, someone to watch carefully for his goals of profit over anything else. The move is interesting and in part necessary—for how many years have we watched Barnes & Noble staggering toward the edge of a cliff? But when Daunt was asked in Jerusalem what he thought of a Barnes & Noble on his last store visit, he said, “There were too many books,” by which he meant that sales strategy—featuring the right inventory rather than a big blur of titles—is his priority. Back in 2015, he commented to Slate, “My faculties just shut down when I go in there.” However things proceed from here, it likely won’t be easy for anyone. For more on Daunt and his turnaround of Waterstones—and his views on bookselling in the age of Amazon—see this Shelf Awareness piece from two years ago.
Jane Friedman has spent her entire career working in the publishing industry, with a focus on business reporting and author education. Established in 2015, her newsletter The Bottom Line provides nuanced market intelligence to thousands of authors and industry professionals; in 2023, she was named Publishing Commentator of the Year by Digital Book World.
Jane’s expertise regularly features in major media outlets such as The New York Times, The Atlantic, NPR, The Today Show, Wired, The Guardian, Fox News, and BBC. Her book, The Business of Being a Writer, Second Edition (The University of Chicago Press), is used as a classroom text by many writing and publishing degree programs. She reaches thousands through speaking engagements and workshops at diverse venues worldwide, including NYU’s Advanced Publishing Institute, Frankfurt Book Fair, and numerous MFA programs.
