Drawing New Customers : Technology: Educational software could open additional markets for Tustin-based publisher of how-to art books.

TUSTIN —  Ross Sarracino quit drawing when he was 11 because it was not much fun and he got wrapped up in sports. The president of Walter Foster Publishing, a maker of instructional art books, knows palpably why he has few teen-age customers.

But Walter Foster is now getting into educational software--and that could open up new markets for the 74-year-old company.

Walter Foster’s how-to-draw books provided the contents for Dabbler, a software program that enables users to sketch and paint on the computer, using a mouse or a stylus. Developed by Fractal Design in Northern California, under a licensing agreement with Walter Foster, Dabbler hit computer stores last spring. And early next year, the publisher’s book on animation will be the basis for a CD-ROM to be marketed by Motionworks of Vancouver.

“For us to grow in the future, we need to move into this type of technology,” says Sarracino, adding that his company is teaming up with other multimedia enterprises to convert even more of its 161 titles for software use.

Sarracino would be happy to get a tiny piece of the booming educational software pie. With millions of children now having access to computers at home, analysts say, sales of such products for home use will approach $500 million this year--nearly double that of 1993 and roughly the same as the total market for the art supply industry.

“By the end of the century, there will be phenomenal growth,” says Seth Feinstein, an analyst at Crowell, Weedon & Co., an investment banking firm in Los Angeles.

And there is even more potential at schools, which are already spending more of their textbook dollars for software.

“I think in the future, rather than young children picking up crayons and watercolors, they’re going to sit in front of the terminal to get their introduction in art,” says Brenda Lugannani, who buys art materials for Michaels Stores, the nation’s largest art and craft shop chain. “We have to prepare for that future.”

At Walter Foster, Sarracino does not see sales of software eclipsing sales of its printed books any time soon. The private firm, which has annual revenue of about $6 million, does not have the wherewithal to develop multimedia products on its own or get into them in a big way. Nor does it want to.

But income from licensing fees and other multimedia joint ventures could provide a big lift to Walter Foster as it heads into its 75th year.

The company, founded in 1921 by hog-medicine salesman Walter Foster, has become the nation’s leading publisher of how-to art books and is known to artists and cartoonists worldwide. But in the past decade, the company has struggled in a declining industry.

Two of its key markets are children and older adults, mainly homemakers who take up art as a hobby. But more women are working today than in past generations, and financially strapped schools have cut back on art funding.

As a result, Walter Foster’s sales were down to less than $3 million in 1988 when Sarracino, a former Price Waterhouse accountant, and other investors bought Walter Foster from the founder’s grandson, Lyle Foster.

Since then, the publisher has refurbished old titles and added dozens of new ones, including a children’s line with books such as “How to Draw Lion King,” which Walter Foster put out under a licensing agreement with Walt Disney Co.

Walter Foster also recently introduced how-to kits that include its step-by-step drawing books, sketching paper and drawing pencils--and they are selling not in dusty mom-and-pop art shops but in upscale stores that cater to baby boomers and their kids, such as Learning Smith and Natural Wonders.

“The party we’d like to crash are young people,” says Paul Hegness, a Newport Beach attorney who is one of Walter Foster’s four directors. The others are Sarracino, Andrew McNally IV of the Rand McNally map-making family in Chicago and Illinois businessman Rhett Butler.

McNally had eyed Walter Foster earlier for possible investment, Hegness says, so one day in 1988 Hegness “cold-called” him, and McNally sent a $25,000 check via overnight mail as a deposit on Walter Foster.

Hegness, a longtime neighbor of Sarracino in Irvine’s Turtle Rock area, says that he invested in Walter Foster because of its reputation and broad distribution channel. Walter Foster’s products are in about 15,000 mass-market and specialized stores globally, and its name is virtually synonymous with how-to art books.

“When I thought about what I would use for the contents for the Dabbler, I immediately thought of Walter Foster,” says Steve Manousos, vice president of sales at Fractal Design. “When I was a kid, I used Walter Foster.”

Manousos says that Dabbler, which retails for about $65, has been selling at a rate of several thousand a month. Manousos declined to say what Fractal pays Walter Foster, but it figures to be significant because Dabbler comes with a manual that is largely a reprint of Walter Foster’s how-to-draw books and a separate Walter Foster instruction book on the use of colors.

Dabbler is sold by computer retailers such as Egghead and Comp U.S.A. But it will be at least a year before such software programs appear in key Walter Foster distribution points, which are not sure that traditional art customers are ready just yet to enter the computer age.

“We are going to watch what goes on,” says Lugannani, the buyer for Michaels, which has 372 stores and carries Walter Foster’s books and kits.

But in the long run, Lugannani and others believe, computer software will be as important to fine art as it is now to graphic design.

Diane Wenrick, senior buyer for Aaron Brothers Art Marts, says that she just finished a test of Dabbler at the company’s store in Brea. “Some customers were very excited,” she says, but others were intimidated by something so different from canvasses and paint.

As a result, Wenrick says, art-related software will be available at some of Aaron Brothers’ 70 stores next year. “We’re going to go real slow with it,” she says.