Germany’s Bertelsmann Reports a Half-Year Decline at PRH; Dohle Messages Staff

In News by Porter Anderson

‘Underlying operating revenue and profit numbers for Penguin Random House in US dollars have been stable year-over-year,’ Markus Dohle tells PRH staff, following the half-year report from Bertelsmann.

Markus Dohle, Penguin Random House CEO, speaks in May at BookExpo in New York City. Image: Porter Anderson

By Porter Anderson, Editor-in-Chief | @Porter_Anderson

Dohle: ‘Global Achievements’
In its report arriving overnight from Gütersloh, Bertelsmann—parent of Penguin Random House—is reporting that its overall 2018 first-half revenues rose to €8.2 billion (US$9.6 billion), its highest result, the company says, in 11 years, with a group profit of €501 million (US$584.4 million).

The news on Penguin Random House, however, is different, recording “declines in sales and earnings” in the same period, the first half of 2018.

And in a letter to staff dated today (August 30), Penguin Random House CEO Markus Dohle writes, “I’d like to give you some context and perspective on those numbers, highlight some of our key global achievements so far this year, and, especially, thank you for all you are doing on behalf of our books.”

First, it’s helpful to have some extensive read-out from Bertelsmann’s report as background to Dohle’s comments. The new from Bertelsmann says, in part:

“Penguin Random House recorded declines in sales and earnings, due to exchange rate effects, among other factors.

“Including Germany’s Verlagsgruppe Random House, which is wholly owned by Bertelsmann, revenues amounted to nearly €1.5 billion [US$1.8 billion], 3.3 percent down from just over €1.5 billion in the first half of the prior year. Strong growth in audio formats, and numerous bestsellers such as The President Is Missing by Bill Clinton and James Patterson and 12 Rules for Life by Jordan B. Peterson were offset mainly by negative exchange rate effects.

“Operating EBITDA fell by 17.0 percent to €171 million [US$199.9 million] (H1 2017: €206 million [US$240.8 million]).

“Penguin Random House invested in the expansion of its direct-to-reader relationships and continued to optimize its retail supply chains. During the reporting period, the publishing portfolio was expanded with the acquisition of the nonfiction publisher Rodale Books in the United States and the paperback publisher Hind Pocket Books in India.

“In the United States, Penguin Random House had 178 titles on The New York Times bestseller lists in the first half of the year, 25 of them at No. 1. The biggest bestsellers of the reporting period [included] … Ernest Cline’s novel Ready Player One, which served as the basis for the eponymous Steven Spielberg movie, and was also very successful as an audiobook.

“In the United Kingdom, 41 percent of all books on the The Sunday Times bestseller lists were Penguin Random House titles. In addition to the above-mentioned works that were successful in the United States, Sapiens by Yuval Noah Harari and Still Me by Jojo Moyes sold particularly well in the United Kingdom.

“At Penguin Random House Grupo Editorial, the progressive integration of the Ediciones B publishing group and growth across print and audio resulted in higher revenues. This compensated for countervailing effects arising from difficult conditions in some Latin American markets.

“In Germany, Verlagsgruppe Random House had 251 titles on Der Spiegel bestseller lists, 11 of them at number one.

“The publishing group maintained its market-leading position despite lower year-on-year sales figures. Multiple Penguin Random House authors won prestigious awards, including a Golden Man Booker Prize for Michael Ondaatje’s The English Patient as the best work among the 50 Man Booker Prize winners to date.”

To Penguin Random House staffers, Dohle writes, “Even though the reported Bertelsmann headline numbers were down for its book division in euros, the underlying operating revenue and profit numbers for Penguin Random House in US dollars have been stable year-over-year.

“This means that the quality of our business and our earnings have been on the same—high—level as in the prior year. Our core business remains very strong globally.”

Dohle: ‘To Carry Us to This Year’s Finish Line’

Dohle’s message is, in essence, better things are ahead. “We have a terrific publishing lineup worldwide to carry us to this year’s finish line,” he writes, ” with new potential national and local bestsellers on the schedule from now through December.

“And of course, publishers in each of our territories are busily planning for Michelle Obama’s Becoming, [the release of which] on November 13 we are globally coordinating in 24 languages.”

He also notes acquisitions and new imprints established in recent months, anticipated to be of strategic value, writing, “In the U.S., we acquired the highly regarded wellness publisher Rodale Books. In India, Penguin Random House purchased Hind Pocket Books, one of the nation’s most respected and backlist-rich Hindi-language publishers, an acquisition that expands our local-language publishing program.

“We have also established multiple new and innovative imprints, among them Kokila at Penguin Young Readers and Random House Graphic at Random House Children’s Books in the US, as well as Strange Light from our Canada company, Penguin Petit in India, and Selecta from Grupo Editorial.”

Audio, Dohle writes, is up “in double-digit percentages over this period last year in most of our territories.” He references data-driven efforts to reach out to reader-consumers, and strong rankings as a workplace, as well as facilities investments: “We continued to make improvements to our supply chain. Our UK and Australia distribution-center investments and projects are (almost) finished, and in April we opened a new building in the US to expand the capacity of our Westminster, Maryland, facility. These large investments continue to help us enhance the efficiency and profitability of our booksellers—and of our own company.

Overall, Dohle’s messaging asserts, all is well and getting better, despite disappointing financial reportage from Germany. “In this year of ongoing unrest and anxiety worldwide, our authors’ books across categories are needed more than ever,” writes Markus Dohle.

More from Publishing Perspectives on Penguin Random House is here.

About the Author

Porter Anderson

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Porter Anderson is a non-resident fellow of Trends Research & Advisory, and he has been named International Trade Press Journalist of the Year in London Book Fair's International Excellence Awards. He is Editor-in-Chief of Publishing Perspectives. He formerly was Associate Editor for The FutureBook at London's The Bookseller. Anderson was for more than a decade a senior producer and anchor with, CNN International, and CNN USA. As an arts critic (Fellow, National Critics Institute), he was with The Village Voice, the Dallas Times Herald, and the Tampa Tribune, now the Tampa Bay Times. He co-founded The Hot Sheet, a newsletter for authors, which now is owned and operated by Jane Friedman.