Wednesday, August 31, 2011

Profits Surge at Random House


The digital transition is proving to be a profitable one for Random House. Bertelsmann, parent company of the country’s largest trade book publisher, reported this morning that RH's operating EBIT (earnings before interest and taxes) jumped 72.5%, to 69 million euros ($99 million), in the first half of 2011 driven by a strong bestseller performance, large gains in e-book sales and improved operating efficiencies. Revenue in the period fell slightly, to 787 million euros ($1.14 billion) from 791 million euros, hurt by the weak dollar. Excluding the impact of currency exchange, sales were up.
 
In his letter to employees, Random House chairman Markus Dohle noted that demand for “Random House content around the world continues to be enormous.” Nowhere was the demand greater than in the U.S. which led Random’s growth. Dohle pointed to “our bestseller successes, operational efficiency, and more than 200 percent growth in e-book sales” as the factors contributing to the performance. Digital sales across all RH companies for the first half of 2011 have already exceeded their total for all of 2010, Dohle noted. In the U.S., digital sales accounted for over 20% of revenue with RH making more than 27,000 titles available in e-book formats. 
 
In his letter, Dohle underlined a number of initiatives: “we have launched several new print and direct-to-digital imprints, introduced new formats and business models, and acquired the leading digital media studio Smashing Ideas. We are continuing to strengthen our supply chain to help make our retail partners’ business more efficient and more profitable with Random House titles. And we are working together in a global effort toward our immediate and long-term top priority: connecting and communicating directly with readers through marketing innovation. Our cross-company collaboration and cost consciousness are yielding many internal benefits, ultimately helping us broaden our investments in author acquisition and development, which will always be the heart of our business.”
 
The economic uncertainty will not make it easy to maintain the momentum in the second half of the year, but RH has a strong publishing lineup, Dohle said, and is off to a good start with the summer blockbuster A Dance with Dragons by George R.R. Martin. The success of the new book has led RH to reprint 4 million copies of Martin’s four early works in the A Song of Ice and Fire series, a figure, Dohle noted, “which reminds us that the print side of our business is an indispensable contributor to our greater publishing success.”
 
*From PW Daily
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