Penguin Random House parent Bertelsmann has just shared its financial results, which give the lie to any suggestion that Big Publishing is struggling in current market conditions, as the Big Five leader records higher revenues and profits than ever. Bertelsmann CEO Thomas Rabe, meanwhile, has revealed, in an interview with the Financial Times, that the group plans to spend up to €1.3 billion ($1.45 billion) a year until 2020 on further acquisitions.
According to the announcement, “the world’s leading trade book publisher Penguin Random House significantly increased both its revenue and operating profit in the financial year 2015. Its revenues increased 11.8 percent to €3.7 billion [$4.14 billion] (previous year: €3.3 billion [$3.7 billion]) in stable market environments across its territories, thanks to positive exchange rate effects. Operating EBITDA rose sharply by 23.2 percent to €557 million [$623.25 million] (previous year: €452 million [$505.76 million]).”
Other interesting figures include Bertelsmann’s plans to expand the digital footprint of Penguin Random House and its other units. “Penguin Random House last year extended its e-book catalog to more than 110,000 titles,” the report related. Penguin Random House is currently Bertelsmann’s third most lucrative division, behind broadcaster RTL Group and CRM/digital services provider Arvato. Rather than Penguin Random House, though, the acquisition plans shared by Rabe focus on RTL, German magazine publisher Gruner + Jahr, and e-learning assets.
Another interesting item cited in the announcement is that “Penguin Random House further expanded its digital business across all markets. However, in the United States, e-book sales were affected by new retail sales terms.” In other words, Bertelsmann is acknowledging that Penguin Random House has lost ebook sales due to its new arrangements with Amazon. Also, “during the reporting year, the publishing group sold the self-publishing unit Author Solutions.”
Rabe also told the Financial Times about Bertelsmann’s plans if Penguin Random House co-owner Pearsons chose to exercise its option to sell some or all of its 47 percent stake next year. He stated that “Bertelsmann had been approached by a ‘large number’ of institutional investors and family officers interested in taking a stake in Penguin Random House once Pearson quits. Bertelsmann itself would seek to increase its share of the company to 70-75 per cent.” Rabe concluded that “publishing is pretty sexy.” Perhaps someone should tell that to the writers still struggling under invidious contract terms imposed on them by Penguin Random House and its Big Publishing peers.