Bennett Donates M & S to U of T

When the larger-than-life Jack McClelland ran the venerable Canadian publishing house co-founded by his father, McClelland & Stewart was no stranger to headlines.

Bennett Donates M & S to U of T

When the larger-than-life Jack McClelland ran the venerable Canadian publishing house co-founded by his father, McClelland & Stewart was no stranger to headlines. Sometimes it was McClelland's outrageous publicity stunts, like the freezing March day in 1980 when he visited several Toronto bookstores dressed only in a toga and laurel leaves to flog a novel set in ancient Rome. More often, though, it was the unending financial difficulties that shadowed his commitment to Canadian literature. But it is doubtful that McClelland, who headed the now-94-year-old company from 1953 to 1985, ever caused a bigger stir than Avie Bennett, his successor as owner, did last week. He had insured his firm's future, Bennett told a news conference, by the bold step of giving it away, to the University of Toronto. "To achieve the survival of one great Canadian institution, I have given it into the care of another great Canadian institution."

It was an unprecedented, adroit and swift move by the white knight real estate developer whose purchase of M&S in 1985 rescued it from its last brush with financial disaster. Approved in advance by the federal government and set to take effect within four days - on Canada Day, no less - the donation achieved three aims at once. It solved what the 72-year-old Bennett called his "succession problem," how to preserve intact the nation's most esteemed publishing program when he was without family or Canadian companies interested in taking it over, and was prohibited by law from selling it to foreigners. The gift also established an endowment fund in support of Canadian culture into which U of T will plow any future profits. The handover even realized some monetary value for Bennett, thanks to the tax credits it will generate. But for supporters present in the august surroundings of the university's governing council chamber - academics, employees and M&S writers among them - it was the publisher's "astonishing generosity," in the words of the firm's new president, Doug Gibson, that brought Bennett two sustained and admiring rounds of applause.

Elsewhere in the small world of Canadian publishing, however, consternation seemed almost as common as approval. Even as Gibson proclaimed that "it is still business as usual: the king is dead, long live the king," others were claiming the earth had moved. Critics found an entire host of printers' devils in the details. In actuality, Bennett gave the university only 75 per cent of M&S's publishing arm, roughly half of its business. (The other half of the old M&S, its so-called agency titles - some 6,000 foreign books for which the firm holds Canadian distribution rights - remains in Bennett's hands.) Bennett sold the remaining quarter of the publishing program to Random House of Canada Ltd., a subsidiary of the American giant, the world's largest English-language publisher, which was itself bought for $2 billion in 1998 by German conglomerate Bertelsmann AG. And Bennett and Random House had signed a deal for the international firm to provide administrative services, including "marketing and sales."

It was the alliance with Random House that put the cat among the pigeons. Bennett said he approached Random House chairman John Neale - who, like seemingly everyone in the business, had once worked for M&S - because "I knew the new company would need a minority shareholder who could help with the business of running a publishing house." But M&S, which bills itself "The Canadian Publishers," is an icon in the industry. Its current list includes Margaret Atwood, Michael Ondaatje, Alistair MacLeod and Anne Michaels; its backlist carries just about every important Canadian writer of the 20th century. For some nationalists, it was bad enough that a foreign tentacle had touched M&S at all - "The Almost-Canadian Publishers," sniffed House of Anansi Press editor-in-chief Martha Sharpe - but most centred their alarm on the marketing arrangement.

Many in the book world believe that the hand that rules marketing rules all. "I think it can be demonstrated very clearly that Random House will have control of this company," fumed an angry Jack Stoddart, head of Stoddart Publishing Co. Ltd. That, he believes, means the new M&S violates the spirit, if not the letter, of federal Canadian ownership rules. Stoddart also denounced what he considered the excessive market share - 45 per cent - he ascribed to a combined Random House-M&S operation. Other critics worried variously over the possibility of Random House eventually buying the university's shares piecemeal or moving risky new Canadian writers on to the M&S list to take advantage of the $1 million in federal grants for which M&S remains eligible. Even two professors from Toronto's York University, where Bennett has served as chancellor since 1998, got into the act, accusing him of disloyalty for giving M&S to their school's downtown rival.

While some observers criticized the tax credits that will eventually accrue to Bennett, others expressed frank admiration. Certainly none of Bennett's fellow Canadian publishers begrudged him some return on the money - estimates run up to $15 million - he poured into M&S after buying it for $2.1 million. Raincoast Books president Allan MacDougall says he, too, is concerned about succession, but at 53 it is not a pressing issue for him (having the rights to the Harry Potter series would probably banish retirement thoughts in any event). "Avie's come up with a very elegant deal," noted Kim McArthur of McArthur and Co. "I'm delighted the government worked with him on it. I hope it means there will be room for flexibility for all of us in the future." That is a natural hope for Canadian publishers, who are all entombed in the same velvet coffin. The federal regulations that protect them from takeover also make it impossible for them to sell their companies.

While Bennett, who told Maclean's he had said all he had to say at the news conference, remained above the fray last week, Gibson and Neale were having none of the criticism. "There is no way we have 45 per cent of the market," says Neale. "It's more like 20 per cent for us, and M&S's nine per cent includes its agency titles, which we are not involved in." Nor can U of T dispose of its shares piecemeal, added Gibson - the agreement stipulates that M&S can be sold, after three years, only in its entirety and only to a Canadian entity. As for Random House controlling M&S, Gibson points to the new company's seven-member board of directors, five of them university appointees - himself, Bennett, just-departed U of T president Robert Prichard, one of his predecessors, John Evans, and Arlene Perly Rae, a reviewer of children's books and wife of former Ontario NDP premier Bob Rae. "You have to be a real conspiracy theorist to see this board as a rubber stamp."

What exercised Gibson the most, however, was his belief that groundless fear was obscuring a remarkable gesture. "I have never seen a gift horse have its teeth more microscopically examined," Gibson said, sounding as though his own teeth were clenched. "The point is the gift - Avie Bennett has made a generous, imaginative gift that will keep M&S going as a Canadian entity." And as the most newsworthy publisher in the nation.

Maclean's July 10, 2000