NEW YORK - The magic of Harry Potter has helped to sell 300 million books in 63 languages, and made J.K. Rowling a dollar billionaire. But the boy wizard has cast a more sinister spell over Scholastic, his New York publisher.
Even though Americans have bought 11 million copies of the latest epic adventure, Harry Potter and the Half-Blood Prince, and the book remains at number two in the Publishers Weekly sales chart, Scholastic's adoption of Hogwarts School of Witchcraft and Wizardry's most famous pupil is causing it financial grief.
Stacks of unsold copies are collecting dust in bookstores and warehouses across the US, and Scholastic - the world's largest distributor of children's books, known for Clifford the Big Red Dog - is bracing itself for an avalanche of returned copies.
Although it bought the rights to the first in the series for a bargain US$105,000 (NZ$149,268)and has since published all six Potter yarns, Scholastic has yet to work out a way of maximising profits on the runaway bestsellers.
The company ordered 10.8 million copies of Half-Blood Prince, the largest print run in publishing history.
"We wanted enough books out there so every single fan could get a book when they wanted it," explained Scholastic's Kyle Good. "This was the number we came up with in collaboration with the retailers."
Buoyed by the news that Half-Blood Prince had sold 6.9 million copies in the first 24 hours, 1.9 million more than on the first day of the previous Potter tome, Scholastic promptly ordered a further 2.7 million copies, bringing the total to 13.5 million.
"This is a cause for celebration, not just for Scholastic but for book lovers everywhere," chirped Lisa Holton, the president of Scholastic Children's Books, at the time.
Now, Scholastic's chairman, Richard Robinson, whose father Robbie founded the firm in 1920, admits bookshops have been left with 2.5 million unsold copies.
Mr Robinson told book-trade analysts he had no plans for accepting large numbers of returned books. He expects that the release in the US of the film Harry Potter and the Goblet of Fire on November 18 will generate renewed interest in the series and mop up the overrun.
However, unlike franchises such as The Lord of the Rings, where the film sparked a boom in sales of Tolkien, the opposite appears to be the case for Harry Potter. It seems Potter films mostly attract those who have already read the book.
Last year, when Warner Brothers released Harry Potter and the Prisoner of Azkaban, reaping US$761 million at the box office, a mere 60,000 copies of the book were sold.
The over-ordering of Half-Blood Prince is just the latest financial headache for Scholastic since it ventured out of the relative safety of its main business - publishing schoolbooks and learning software, mainly through book fairs at schools and through telephone sales - to exploit a blockbusting bestseller.
In years when it publishes a new Potter, the book accounts for around 9 per cent of Scholastic's annual US$2 billion in sales. But far from guaranteeing high profitability, Scholastic's performance since the first Potter in 1998 has been woeful, even though it has netted US$600 million in revenue from the franchise.
Over the past three years, Scholastic's share price has halved, losing 10 per cent this month, and operating margins have dropped from 9 per cent to 6.4 per cent.
In the summer of 2003, when it published Harry Potter and the Order of the Phoenix, Scholastic closed warehouses and laid off 4 per cent of its workforce.
- INDEPENDENTBy Nicholas Wapshott