Aug 31, 2011
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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