PRH Drives Revenue Growth at Bertelsmann

Today Bertelsmann, the majority stakeholder in Penguin Random House, reported that its total revenue grew 2.8% to €17.1 billion or about $19.2 billion in 2015. The company reported that PRH played a significant role in that growth, increasing its revenue by 11.8%. That increase is significant, especially in light or recent reports from the AAP that U.S. publisher revenue it tracks (from about 1,500 publishers) has declined 2.6% over the first 11 months of 2015, compared to the same period in 2014.

In light of Bertelsmann's press release, PRH CEO Markus Dohle wrote a letter to employees highlighting the publisher’s success. Dohle wrote that with the Penguin and Random House merger largely completed, the publisher is in an ideal position to continue its expansion and improve its services for authors and readers. Following are some of the highlights from the Bertelsmann press release and Dohle’s letter.

Blockbusters from Paula Hawkins, E.L. James Drive PRH Growth
The Bertelsmann press release credited PRH’s revenue growth to the breakout successes of Paula Hawkins’ debut novel The Girl on the Train, which sold over 7 million copies in English- and German-language markets, and E.L. James’ novel Grey, which sold 8.5 million copies in English-, German-, and Spanish-language markets.

Ebook Sales Affected by Agency Pricing Terms
Bertelsmann did not provide specific numbers on PRH’s ebooks sales. It reported only, “Penguin Random House further expanded its digital business across all markets. However, in the United States, ebook sales were affected by new retail sales terms.” It is unclear from Bertelsmann’s report whether U.S. ebook sales were down or up from the previous year, only that agency pricing seemed to play a role in overall sales. It will be interesting to see if PRH attempts to renegotiate retailer terms in the future in light of this “affect”.

CEO Markus Dohle Emphasizes Service-Driven Strategy
PRH CEO Markus Dohle sent a letter to employees this morning reviewing the publisher’s 2015 performance and sharing his goals for the future. Dohle wrote that the challenges that came with the merger of Penguin and Random House are largely behind them. He continued that in 2015 the organization was able to implement its service-oriented strategy, “one that makes authors feel like part of our family, gives retailers compelling reasons to partner with us, and ensures that readers can discover our books.”

Dohle wrote that as PRH continues to improve its reader-centric and service-oriented strategy it “will become more than just a publishing company: We will be a true cultural institution -- positively and definitively affecting and enhancing our society.”

Read Dohle’s complete letter below.

Dear Penguin Random House Colleagues:

Following Bertelsmann’s press conference this morning in Berlin, we now have both shareholders’ financial results from 2015. Penguin Random House delivered another successful performance; even more important to these results is how we achieved them. Our numbers from last year are the aggregate sum and realization of your countless efforts and collaborations across our departments, divisions, and territories to solidify our foundation and further our mission.

The second full year of our company was marked by major strides in our evolution. Many of our organizational and systems integrations, in both our English- and Spanish-language territories, have already reached completion. Around the world we also have found more and more ways to bring people together in support of our shared goals. We are a community of communities, and the merger is giving us opportunities to share and learn from one another, enabling us to take full advantage of our collective contributions and expertise.

Last year we benefited from relative stability in our markets worldwide. Even in more challenging economic climates we were able to nimbly and effectively address challenges and embrace opportunities. I am proud of our decentralized structure, which empowers our leadership to support their respective talent, culture, and publishing ecosystems. Last year we once more published the books that inspired the ideas and sparked the conversations meaningful for local audiences.

Publishing quality books and stories that matter is a tradition deep in our core. In a year characterized by the unpredictability inherent in this business, our teams brought drop-in titles and debut authors to coveted accolades and record sales. With our increased publishing portfolio and expanded capabilities as Penguin Random House, it becomes ever more likely that many of the authors we champion will break out. In 2015 we increased those odds by emphasizing our role as the most creative home for publishing and author talent and by reinforcing a service-oriented mindset at every level—one that makes authors feel like part of our family, gives retailers compelling reasons to partner with us, and ensures that readers can discover our books.

This year, like any other, may have uncertainties and challenges, but as the integration becomes smaller in the rearview, we can squarely focus on what’s ahead. As we continue to drive innovation around our reader-centric, service-oriented strategy supporting our content and our authors, we will become more than just a publishing company: We will be a true cultural institution—positively and definitively affecting and enhancing our society. That is, in my view, the most important contribution of all. Wherever you sit and whatever you do at Penguin Random House, you are helping us to achieve this, and I feel privileged to be working together with all of you in pursuit of our larger purpose. I know that the best is yet to come, and I thank you for making that possible.