At a publishing industry Christmas party in Toronto last December, the “No Returns Cabaret and Revue,” staged by the Book Publishers Professional Association, mounted its annual satire of publishing politics and personalities. One of the skits featured actors posing as Louise Dennys and Malcolm Lester, publisher and president, respectively, of the prestigious Toronto-based Lester & Orpen Dennys (L&OD) publishing house. Dennys and Lester were depicted as TV fund raisers, soliciting pledges for their foundering company. In the brief sketch, the actors promised viewers a prize for the largest donation—“a Hees executive bound and gagged and hung with Christmas lights.” That piece of amateur theatrics drew guilty giggles and groans, but it was clearly on target. In real life, Lester and Dennys had spent much of the summer and fall seeking buyers for the firm since its parent company, Toronto-based Pagurian Corp. Ltd.—closely linked with Bronfman-owned Hees International Bancorp Ltd.—had indicated it would not provide funds beyond the fall. The search for a buyer was unsuccessful, and last week Lester & Orpen Dennys suspended operations.
Although rumors of the company’s problems had circulated for most of 1990, publishing
sources still expressed dismay at its closing. Said Greg Gatenby, artistic director of International Readings at Harbourfront in Toronto: “It’s a very sad day for Canadian culture. At a time when Canadian publishing was regarded as important but definitely second-rank, they brought great prestige and élan to Canada.” Still, spokesmen said that L&OD’s demise was not a sign that other publishers were about to close. Said Wayne Gilpin, executive director of the Association of Canadian Publishers: “It raises the question of whether it’s possible to do that kind of publishing in Canada—serious literature aimed at an international market.” In 1980, two years after his original partner, Eve Orpen, died, Lester formed a partnership with Dennys. The firm developed a solid reputation, particularly for its international fiction list, publishing such authors as Graham Greene, P. D. James, Italo Calvino and Martin Amis in Canada. With annual sales of $2 million and a staff of 13, the company gained critical and commercial success with many of its books. Five of its 1990 titles are nominated for the Governor General’s Literary Award, and the firm has sold international rights to a newly created list of children’s books. Declared Lester: “It’s ironic that we seem to be going out with a bang.”
But at the end, the firm’s liabilities outstripped its assets by more than $1 million, and sales had dropped to $1.5 million in 1990 from over $2 million in 1988. Executives of both Pagurian and L&OD partly attribute financial problems to expansion and to a poor spring season last year, which badly affected the entire industry. “The company really hit a wall in July, 1990,” said Brian Lawson, a vicepresident for both Pagurian and Hees, linked to Pagurian since a complicated share exchange in 1988. But Lester claimed that the owners failed to provide enough funds to acquire new titles. Said the publisher: “If you start something up and then cut it short without giving it time to prosper, then a company atrophies.” The company went through a particularly difficult period after its acquisition by Pagurian Corp. in August, 1988. Christopher Ondaatje, then president and chief executive officer of Pagurian, bought the company from Lester and S Dennys for an undisclosed sum at a time when the partners were seeking a mqans of expanding. “This industry is undercapitalized,” said I Lester, pointing out that banks generally do not 1 recognize publishers’ inventory as collateral. “ “We thought Pagurian was the best solution at the time.”
According to Dennys, Ondaatje approached the partners in 1988 and persuaded them of his commitment to their growth. “He said he was interested in making L&OD the hub of a communications empire,” Dennys told Maclean ’s. “It was an attractive offer. We certainly didn’t expect Christopher to sell out four months later.” In December, 1988, Ondaatje concluded a share-exchange deal with Hees, a merchant banking firm, and Lester & Orpen Dennys was included in the package. Said Lester: “We were caught up in a corporate situation over which we had no control.”
For their part, Hees spokesmen said that they made it clear from the beginning that their firm, without experience or interest in publishing, was not committed to the company. Said Hees chairman Timothy Price: “We inherited L&OD as part of a much bigger deal. It would have been wonderful if Mr. Ondaatje had wanted to keep L&OD, but he didn’t.” Lawson said that Hees’s primary responsibility was to help L&OD find a new owner. He added: “They needed a sponsor with long-term strategic interests in publishing. We had little to bring to the table except cash, and that was not the solution.”
Last week, Pagurian officials announced that Toronto-based Key Porter Books Ltd. will assume responsibility for sales, marketing, distribution, subsidiary rights and accounting for L&OD’s approximately 150 backlist titles. Several books which were to be published this spring have been placed with other publishers. Both Lester and Dennys, who say that they intend to stay in publishing in some way, stated that their aim has always been “to publish good books well.” With the closing of Lester & Orpen Dennys, it seems that the familiar àdage should have read “publish and perish.”
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