Fast-Growing Firm : Newman Plots Profits From Books on Tape

Early this year, Los Angeles producer Michael Viner bought a cassette recording of one of David Niven’s books and listened to it in his car.

“I fell in love with it,” Viner recalled, adding that he proceeded to buy at least 60 more recorded books from Newman Communications, the nation’s largest publisher and distributor of audio books.

The addictive quality of recorded books has been good to 4-year-old Newman Communications, President Hal Newman said. And it has led to yet another business venture--this time with Viner.

Newman Communications and Viner’s newly created Dove Books-on-Tape have begun producing a series of recorded books, the first of which appeared in November.

Viner said he expects to buy a sound studio next year and put 60 titles on tape for Newman, which then produces, packages, distributes and markets the cassettes.

More Than $7 Million in Sales

The contract with Dove is just the latest venture for the fast-growing Newman Communications, based in Albuquerque, N.M. The company has seen its sales jump to more than $7 million from less than $200,000 in its first year of operation.

Now, Newman is about to make the leap into production of its own line of recorded books rather than remain strictly a packager and distributor of other firms’ products. By becoming a producer, Newman said, Newman Communications will be better able to attack a growing number of competitors, including several major publishing houses, which are flocking to audio books as publishing’s hot new growth area.

Recorded books are mushrooming in popularity.

“It’s a big market out there,” Newman said. He estimated that annual sales of recorded books will grow to $500 million by 1990 from the current $60 million.

Viner’s instant addiction to audio books isn’t that unusual, Newman said.

Newman likes to tell of a Southern California department store buyer who tested a Newman Communications product on her commute home from work.

It seems that she could be pryed from her car stereo only when her family pounded on the car’s windows as it sat in the driveway of their home. Newman Communications received an order for cassettes to stock the chain shortly after that, Newman said.

“Every year there are more materials to be read and less time to read them in, and everyone feels semi-guilty about it,” Newman said. “We still look on the market as mostly one of new customers, and that will continue for several years yet.”

Among the Dove recorded books that Newman began distributing last month in some of the more than 3,000 stores that carry the firm’s products are: “Having It All,” read by its author, Helen Gurley Brown; Jacqueline Susann’s “Valley of the Dolls,” read by actress Juliet Mills, and Norman Cousins’ “Anatomy of an Illness,” read by Jason Robards Jr.

Newman Communications’ books on cassette are sold nationally through retail bookstores (including Waldenbooks and B. Dalton), record stores, department stores and even car wash “gift shops” (a strictly Southern California phenomenon, Newman said).

Newman handles a wide variety of recorded books from such producers as Listen for Pleasure, American Management Assn., Caedmon and Newstrack, as well as a line of “medically-based relaxation cassettes” put out by Source Cassette Learning Systems of Menlo Park, Calif.

Dove cassettes, like the bulk of those distributed by Newman Communications, will be abridgements of the original works. “Whatever you lose in abridgement you gain 1,000 times over through the reader,” Newman said.

The recorded book arena is a new one for Viner, who, for more than 10 years, has produced television and film projects, both individually and with his company, Dove Inc. Those projects have included Viner’s three-year stint as producer of “Circus of the Stars” for CBS Television; “Willa,” a TV movie for Columbia, and “Touched By Love,” a theatrical release. The latter two starred his wife, actress Deborah Raffin.

Viner said he has diversified into audio books because “I feel that this is the growth market in the recording industry. The key is getting good books, getting good editing jobs done and getting the right person to (read) it.”

Newman said his company opted to produce its own titles “largely because we didn’t think the available producers could deliver to us all the product that the market demanded, and, from a corporate strategy standpoint, we wanted to be vertically integrated.”

Newman recently bought a recording studio in New York and will release its first titles in January. The company, out of its San Mateo office, is testing a catalogue with which to peddle its various lines of cassettes directly to the public.

To finance the new moves, Newman went public in December, 1984, raising $1.32 million in an initial offering of stock. The company’s shares are traded over the counter.

The addition of almost 2,000 new retail outlets carrying Newman products caused sales to jump 463% to $7.04 million in the fiscal year ended March 29 from $1.25 million in the previous year. Newman Communications had net income of $457,640 during the year, compared to a net loss of $83,183 the year before.

The company recorded net losses in each of its first three years of operations because of expenses.

Newman said he isn’t worried by large publishers, including Simon & Shuster and Random House, who are beginning to produce audio books.

“What is clear about books on cassettes is we’re not dealing with the Hula Hoop phenomenon,” he said. “The underlying base of the business continues to grow every year, and bookstores continue to dedicate more space to books on cassette.”