TWST: Can you please give me a brief overview of Bloomsbury Publishing. What is your core business and where do you see yourselves today?

Mr. Newton: Our core business is the exploitation of copyright, and our primary medium is the book. We have a thriving book division which publishes many of the world's greatest authors. Our territory is very much the high ground of literary fiction, and we're fortunate to be the publishers of many top authors including many great North American authors from David Guterson, whose book, 'East of the Mountains,' following up his 'Snow Falling on Cedars,' we've just published, John Irving, where we published a year ago his brilliant 'A Widow for One Year,' and many of his previous books, Michael Ondaatje's 'The English Patient,' and many of Margaret Atwood's novels, and Jay McInerney's 'Model Behaviour,' and a number of his previous books. Many of the world's greatest novelists choose to be on the Bloomsbury list. In addition to our thriving and growing book division, which is fortunate to be the publisher of the number one best selling book in the world at the moment, J.K. Rowling's children's series, 'Harry Potter,' 'Harry Potter and the Prisoner of Azkaban' is currently number one on the U.K. best seller list, having come out on July the 8th, and it's coming out on September the 8th in the U.S.A. In addition to the book division, we have Bloomsbury's Reference and Electronic Media division. And the fourth of August 1999 marks the simultaneous worldwide publication in America, England, Canada, New Zealand, Australia, Japan, South Africa, Germany and India, of the Encarta World English Dictionary, which is the fruit of a collaboration between Bloomsbury and Microsoft together with the U.S. publisher, St. Martin's Press, and Macmillan in Australia to create the world's first digitally compiled dictionary of English viewed as the language of the world. Now all previous dictionaries have been very much rooted in the cultural perspective of the nation where the defining was taking place, whether that was Britain, or America, or Australia, and indeed, this was the right approach for previous times. However, the statistics of the growth of English are explosive. At present, 750 million people speak English as a first or second language. And a further 1 billion people are learning it, and that figure of 1.75 billion people is just over a quarter of the world's present population of 6 billion. However, our own estimates to the time when the millennium babies are becoming the leaders of their society in the year 2050 indicate that over 50% of the world's then population, that is to say, 4.2 billion people out of a projected 7.96 billion people will have competence in English. The implications of this are breathtaking. The opportunities, at a commercial level, for a publishing organisation such as ours to seize that opportunity while it's growing are quite exceptional. We have produced with Microsoft a dictionary which defines the many different versions of English used all over the world, whilst at the same time creating localised editions of that world English so that this work will mean as much to a person in Milwaukee as it does to someone in Melbourne or in Manchester. Indeed, the Encarta World English Dictionary is the first bilingually compiled database of the English language. The American edition compilation effort was led by the distinguished American lexicographer Anne H. Soukhanov, whose previous work was the American Heritage Dictionary. Anne H. Soukhanov has made this a brilliant dictionary for Americans and one where as with the English edition, the advanced orders in anticipation of publication on the fourth of August are nothing short of huge.

TWST: You touched on the size and the growth potential of your industry. What other key trends are you facing in the market place today? For example, obviously the growth of the Internet, and could you appraise the current business climate?

Mr. Newton: The opportunities held to us as exploiters of copyright by the Internet are actually enormous. Not only is this going to be the decisive medium of the exchange of information in the 21st century. It's also a brilliant compilation tool to people, such as ourselves, whose stated goal are to become creators of the big databases of the future. The fact that with our dictionary we are able to keep in daily communication with 320 lexicographers and advisors, worldwide, could not have happened five years ago. This was only possible because of the Internet. But if the Internet is a brilliant compilation tool, it's also an excellent sales medium. And the fact is that the online booksellers have, in my opinion, rightly achieved their high ratings on the stock market because the Internet and online bookselling do bring, genuine, added-value to the process of selecting a book, not only because every book is always in-stock, online, and you can find out full information about it without needing an individual bookseller of encyclopaedic knowledge, but also because of the excellence of service that is provided by these online booksellers at getting the book to you. And of course, the sheer convenience of it. The reason why online bookselling is and will go on being so successful is if you consider the very numbers of books in print, in the U.K. alone, for example, 1.2 million books in print, it plays to computer's great strength, which is the ability of a computer to search through a morass of information for exactly what you want. And it's for this reason that, our own online bookselling service is already a success. The fact that we sell books online and indeed, other British publishers do as well, differentiates us from most American publishers who for domestic trade reasons do not sell books. They use their own Web sites merely as advertising and promotional sites for their companies. However, for us, in addition to that, these are active bookselling operations backed up by our own first class distribution network, and we receive many orders for online book purchases ourselves.

TWST: What does distinguish you from the rest of the publishers? What are your company's advantages? And, what or who do you see as your competition?

Mr. Newton: We believe that our advantage is that we are tightly focused on being book publishers and electronic database content creators. Many other publishers are parts of large international media concerns, and their attention is necessarily on other activities much of the time. We are a medium size player proving the principle that medium size can be beautiful. It allows you to give a level of attention to your core activity, which can be elusive in operations that are much bigger. And it's for these reasons that Bloomsbury have succeeded in operating on the world stage where we have many number one best sellers, not only in the U.K., but also in Australia, New Zealand, Canada. And indeed, now, in America, with one of the most exciting recent developments in our company which was the launch last September, just under one year ago, of Bloomsbury U.S.A., which is based in the Flatiron building in Manhattan, where we have staff within the same building as St. Martin's Press, a distinguished arm of the Macmillan and Von Holtzbrinck publishing empire, also owners of Scientific American, Farrar, Strauss & Giroux, and other publishers. Their sales force are out on the road selling Bloomsbury's books, both the British books including works such as 'The Tulip,' by Anna Pavord, which went to number 29 on the New York Times best seller list following the great appreciation it received on Martha Stewart's television program and in many positive reviews in the U.S. press, to the tour undertaken this week by Ralph Fiennes, and his sister. Ralph, the star of 'The English Patient,' is promoting his mother, Jennifer Lash's book, 'Bloodties,' which has just been published by Bloomsbury U.S.A. In addition, our commissioning editor in New York has acquired world rights in New York to a number of books. We use our operation in London to sell foreign rights to vital markets such as Germany, in those works, and thereby increase the revenue stream which we can enjoy from them.

TWST: Do you see the market changing over the next two to three years, especially with regards to, customer needs, capital, technology, human resources, etc?

Mr. Newton: We're fortunate in the publishing industry in that our customer base is expanding. Here in the U.K., we've seen the arrival of Borders, who have taken over the excellent London-based chain Books, etc. Borders superstores are now being opened in a number of the main cities in Britain ranging from Glasgow, to Brighton, and Leeds. It's not for nothing that competition is business' best ally. It's improving the game overall. A leading British quality bookseller, Waterstones, who also have shops in the U.S.A., have been opening superstores here in Britain, with big ones planned for London's Oxford Street and Piccadilly later this summer. In addition, some medium sized retail unit chains such as Ottakers, have been pursuing very ambitious expansion plans, all of which are helping us to sell more books.

TWST: Are there any other changes that your company is planning at the moment to maintain and improve its market position and to respond to the developments that you've just talked about?

Mr. Newton: The main changes that we're making are to radically increase our stake in the digital future of publishing by having created the reference and electronic publishing division. It is important to state that the Encarta World English Dictionary database, which has attracted huge attention worldwide in the last five days, is in fact one of only three major databases of comparable size being constructed in the Bloomsbury reference and electronic media division. The other two databases are not yet announced. One will be announced, possibly at the end of September 1999, and the other one, not until April 2001. However, suffice it to say that they follow the business profile of Encarta where we work closely with a third party multinational corporation in creating exactly the work needed by customers worldwide. The second big development for us is of course our expansion into America. Simple, you would have thought because it is the largest English language book market in the world, but something where many British companies, not only publishers, have made a mistake of misinterpreting the market. Perhaps I have the good fortune to be half American myself, having grown up in San Francisco, and therefore having a good knowledge of the American market. And our approach has been to start cautiously and to grow. And that growth phase, the second phase, is now underway and is going extremely well. The third development is we are looking closely at the Internet and the other opportunities that it provides as a sales medium for us, direct to the customer.

TWST: Is there anything specific that could actually cause you higher than expected growth or profitability for Bloomsbury?

Mr. Newton: One is always cautious to make any statements of that kind. However, I do have to admit in the last three weeks, since the launch of the third volume in the 'Harry Potter' series on July the 8th, one has been reminded that there is no predicting how big it can get. With Harry Potter's third book, we've now sold 1.7 million copies of the three books in the series, which is a big number for a country with a population the size of England. The launch of the third book has created tremendous demand for the first two books in the series. And we are now, with the launch of the Encarta Dictionary this month, at the end of one of the biggest months in our company's history.

TWST: At the opposite end of the scale, what are the limitations on growth for Bloomsbury? Again, for example, the bottlenecks on potential, capital, human resources? Is there anything that could go wrong?

Mr. Newton: There aren't limits on the human resources because the management team we have here, including really the top 12 heads of department are all people who have worked for bigger organisations and have the capacity to handle very considerable workloads and volumes, and with great skill. In addition to that in terms of capital resources, we are well supported by our shareholders, the institutions, and private individuals who own Bloomsbury through its London Stock Market listing. When we have needed capital for expansion in the past, it has been readily forthcoming, and indeed, we held a GBP 6.1 million rights issues in October 1998 in what was considered by many to be the worst week in recent financial history with the recent crash of the LCTM hedgefund and bad news coming out of both Russia and Brazil. Our rights issue, in spite of all of that, was oversubscribed and we got the full amount of money when we needed it.

TWST: What about acquisitions and joint ventures? Are they part of the growth strategy? What would you need to happen for you to be satisfied in let's say one to two years time?

Mr. Newton: Our strategy is very much one of organic growth, and often organic growth through strategic partnerships on individual projects. That's the way of the future as far as we're concerned. You don't need to mingle your equity with that of another company to enjoy the benefits of cross-pollination; that can come from working together on a particular and often huge project, as in the case of our link up with Microsoft on the Encarta World English Dictionary.

TWST: You've already mentioned your management team, obviously, you feel they're equipped to handle the growth strategy. Are there any other areas that you feel to be truly outstanding within the management team?

Mr. Newton: The two most outstanding areas in the last 12 months have been the reference publishing team and the children's division, but I must also mention our core activity of literary fiction publishing because in the last 18 months or so, new books having come out from the likes of David Guterson, Joanna Trollope, John Irving, and others. Our core business is in extremely strong shape.

TWST: What are the areas that you focus on personally? What do you feel are your biggest strengths as the CEO?

Mr. Newton: I focus on leading the business forward, the strategy for the future and rolling up my sleeves in the case of some of those big areas such as the reference and electronic area where I am personally, closely involved in the relationship with Microsoft and in our relationships with other multinational corporations on particular projects. Naturally, I also spend part of my time communicating with large institutional shareholders and the financial press. And I make a great deal of my time available to directors of this company as they deal with things they want advice on. But my primary interest is in the strategy for the growth of the company to become one of the world's leading providers of content for the future, particularly in digital formats, and to expand Bloomsbury's powerful presence in the literary marketplace as the publisher of many of the most widely read and best novelists in the world.

TWST: Now looking at the financial investment issues, if you did have some potential long-term investor looking over your shoulder at the financial reports, what are the one or two operating statistics that you focus on and would point out to them, to allow them to have insight into Bloomsbury?

Mr. Newton: I would draw people's attention to the growth of the operating margin. It's been a big success story at Bloomsbury how we have managed to take our operating profit up to the 14% region. That's a good percentage in the industry. The turnover, of course, has also been growing recently.

TWST: What should the investor know about your margin dynamics, for example? What are the key factors that impact your margins at the moment?

Mr. Newton: Well, key factors include tight cost control through getting things like one's distribution percentage right. Tight control of inventory, tight control of general overheads of running any business on the one hand, with, on the other hand, willingness to take risks in the acquisition of the writers of the future so that we are backing our own judgements. One of the great strengths of Bloomsbury is it's research and development function. Our Editors who all have share options in the company, have an exceptional track record of identifying first time novelists and signing them up, even when other publishers turn them down, as in the case of J.K Rowling now the top of the New York Times best seller list, whose work was turned down by at least four of our competitors here in the U.K.

TWST: And the key areas, or the drivers that create company sales and profitability , 'what are they at the moment?

Mr. Newton: The key areas are having the right books, being able to conceive the right databases for the future, and having a sales force that is completely oriented to results, as we have here.

TWST: For investors today, are there any concerns that they should have? Are there any warning signals that they should be alert to, specific to Bloomsbury?

Mr. Newton: The danger with book publishing, as with record publishing, and many other media areas is that they involved the prediction of public taste, one to two to three years ahead of time when you commission a work. So nobody has a perfect crystal ball. The important point for investors is to assess the skill, if you like, of a portfolio manager of the management team of a given publishing house. And Bloomsbury has an exceptional track record as portfolio managers having our own successes considerably outweighing our own failures. If we had no failures, we'd be very worried people. We do, but we have a great list of hits and best sellers over the 14 years of this company's life, and we stand to be judged by that record.

TWST: Could the investment community improve its perception of Bloomsbury? Is there anything that it's currently missing, and what are you doing to counter those misperceptions?

Mr. Newton: I think some people may be slow to recognise the significance of our reference and electronic publishing division, and some of them may be waking up to that this week with the launch of this superb dictionary which we've created together with Microsoft. A dictionary, I might say, which not only celebrates the diversity of world English, but is produced in British editions, and in American editions, very much celebrating the origins of both of those varieties of English.

TWST: Could you give me a summary statement? The essential message for investors today , 'your strengths and the highlights that compel an investor to buy into Bloomsbury?

Mr. Newton: Anyone considering buying into Bloomsbury would wish to consider a cross section of our performance by looking at what we've achieved in the last 12 weeks. In May, we launched David Guterson's best selling novel, 'East of the Mountains,' following on from his 'Snow Falling on Cedars,' of which we've now sold from the U.K., three quarters of a million copies, and a book which very much demonstrates our ability to sign up first time novelists who are the genuine talents of the future, as the very brilliant David Guterson is. Secondly, they would look to the month of July and see the launch of the third book in the Harry Potter series. A book which would have been a success no matter what we've done, but the fact that we've made it sell four times as many as any comparable children's book ever, shows the skill with which it's been marketed. And thirdly, they would look at the launch this week of the Encarta English Dictionary and see that we're not only part of the digital publishing future, but that we're preparing to be leaders of that future.

TWST: Thank you.

NIGEL NEWTON CEO Bloomsbury Publishing PLC 38 Soho Square London W1V 5DF United Kingdom 0171 494 2111 0171 434 1190 - FAX

Each Chief Executive who is the featured subject of a TWST Interview is offered the opportunity to include an Investors Brief or other highlight material to be provided and sponsored by and for the company. This Interview with Nigel Newton, CEO of Bloomsbury Publishing Plc, is accompanied by an Investors Brief containing corporate information.