By Porter Anderson, Editor-in-Chief | @Porter_Anderson
Dohle: ‘Let’s Look Forward, Country by Country’In its interim report for the first six months of 2022, Germany’s Bertelsmann describes for Penguin Random House an increase in revenues for the first half of the year, driven by positive currency effects.”
Earnings reports on Penguin Random House, the world’s largest trade publisher, are watched internationally, logically, as the United States’ book publishing industry overall, for signals of direction and for comprehension of trends. this is one reason that the next comment is interesting many who follow industry statistics.
“Adjusted for exchange-rate effects,” revenue and earnings declined, given the continuing inflationary pressure and supply-chain challenges. Penguin Random House revenues increased by 6.3 percent to €1.9 billion (US$1.9 billion) over the 2021 first half’s €1.8 billion, while operating EBITDA decreased by 20.6 percent to €257 million over the 2021 first half EBITDA of €324 million.
“A trial in the US government’s challenge of Bertelsmann’s planned purchase of Simon & Schuster was held in August in the US District Court in Washington, DC. The judge’s ruling is expected this fall.”
In addition to “supply-chain challenges”—a meaningful concern for so many in world markets—a specific point mentioned in the Bertelsmann report is the emphasis on consumers’ engagement in backlist. While on its face, this might sound like a welcome boon—and during the most severe spread-mitigation restrictions of the still-ongoing coronavirus COVID-19 pandemic, the trend cheered many market-watchers—some corresponding softness in frontlist has accompanied the phenomenon during a period without breakout blockbusters.
Nevertheless, there are cheering sales anecdotes to be brought forward. “In the first half of the year,” Bertelsmann says, “the publishing group again benefited from strong sales of backlist titles, such as Atomic Habits by James Clear and Where the Crawdads Sing by Delia Owens. The latter sold a further 2 million copies in the United States alone in the run-up to its theatrical film release. Successful new releases in the United States included Sparring Partners by John Grisham and How to Raise an Antiracist by Ibram X. Kendi.
“In the children’s book sector, Dr. Seuss classics sold more than 5.7 million copies in all formats and editions. Penguin Random House secured the rights to U2 singer Bono’s memoirs for its English-language publishers. Titled Surrender, the book will be published worldwide on November 1.”
Upbeat news from some of the PRH international markets includes:
- “A revenue increase” for Penguin Random House UK, Bertelsmann says, “thanks to higher export revenues and a recovery of high street bookstore sales. The DK division increased its revenues and earnings over the prior year, driven by growth across its publishing list.”
- In Germany, ” Penguin Random House Verlagsgruppe recorded a year-on-year revenue decline caused by a soft market development.”
- PRH Grupo Editorial, the Spanish-language hub based in Barcelona “achieved record results again, thanks to strong performance in Spain and Latin America.”
- The publishing houses in Australia, New Zealand, India, and South Africa performed well in the first half of 2022, Bertelsmann says, “as did Grupo Companhia das Letras in Brazil.”
Interpreting the News
In his memo to the staff, Penguin Random House worldwide CEO Markus Dohle reiterates the fact that by comparison to the first half of 2021, the first half of this year saw PRH’s revenue increasing thanks to positive exchange-rate effects, and an earnings decline because of “inflationary cost pressure.”
However, like chairman and CEO Thomas Rabe and his team at Bertelsmann, Dohle points to London-based division DK Worldwide—which is led by co-CEOs Paul Kelly and Rebecca Smart—and elaborates on the Bertelsmann report’s phrasing, writing that DK “had the strongest first six months globally since they became part of Penguin Random House.”
He, too, also mentions “the profitable growth story in our Grupo Editorial business (Spain, under CEO Núria Cabutí) extended by another record performance—which includes our market-leading Spanish-language business in the United States.”
Penguin Random House Publisher Services US “continued its growth, and Disney will join in 2023. And our ever-expanding global audio business has become a strong growth pillar of our publishing efforts and reader experience in many countries around the world.”
Dohle: ‘The Link Between Our Work and the World’
“We have always navigated the volatility and unpredictability of our publishing business with creativity, entrepreneurship, and innovation, Dohle says in his memo, “and so far, 2022 is no exception.
“Let us remember the inextricable link between our work and the world, especially as book bans proliferate and authors are at risk, including the recent, horrific attack on Salman Rushdie.”Markus Dohle, Penguin Random House
“The long-term shift to online sales has resulted in strong backlist growth and a technology- and data-driven transformation of our sales, marketing, and publicity instruments and tools. We will continue to invest in this transformation and develop new competitive advantages to maximize the positioning, visibility, and sales of both our new publications and our rich catalogues on a global scale.”
In regards to those supply-chain and technical challenges, Dohle says, “Worldwide, significant cost increases, from paper and production to distribution and freight, among others, won’t disappear in the foreseeable future. Therefore, we all need to approach our business with a lean, efficient, and productive execution mindset while maximizing value for our authors and their works.
“Ultimately, it is, and will always be, about the books and the maximization of readers’ demand for every single one of them.”
Always the articulate coach, Dohle then encourages his staffers, “Let’s focus on our terrific publishing lineup for the upcoming holiday season, including a new, global publication by Michelle Obama in 35 countries on November 15. The Light We Carry has a first print run of 2.75 million copies for North America alone. Happy sales to both our sales reps and our bookselling partners around the globe!”
And, also in in line with his abiding position on the role that publishing plays in democracy, the world order, and free expression, Dohle writes, “Let us also remember the inextricable link between our work and the world, especially as book bans proliferate and authors are at risk, including the recent, horrific attack on Salman Rushdie. I’m deeply moved by the global literary community’s immediate response of solidarity with our author, including a reading of his works on the steps of the New York Public Library, to send a strong signal that we will always champion the free flow of ideas and the written word.
“Let’s look forward,” Dohle writes, “country by country, imprint by imprint, and book by book, as we continue to write the story of Penguin Random House and create the future of books and reading in our society for generations to come—starting with the next one!”
More from Publishing Perspectives on Penguin Random House is here, and more on its parent company Bertelsmann is here. More from us on Markus Dohle and his leadership is here, more on Simon & Schuster is here, more on mergers and acquisitions is here, and more on industry statistics is here.
Among our extensive B2B programming in the new Publishing Perspectives Forum at Frankfurter Buchmesse, Penguin Random House Grupo Editorial CEO Núria Cabutí will be in conversation with us on Thursday, October 20 at 10 a.m. CEST in a day-starting Executive Talk. All Forum programming is open free of charge to Frankfurt Book Fair trade visitors and exhibitors. We hope you’ll join us.
More from us on the coronavirus COVID-19 pandemic and its impact on international book publishing is here.