Random House CEO Dohle Addresses Performance in Letter

Random House Asia
Results were mixed for our Asian company, with profit improvement for Random House Korea, but not for the Tokyo-based Random House Kodansha. Both marketplaces have also been affected by difficult economic conditions. “An Inconvenient Truth” by Al Gore and “The Last Lecture” have been top sellers for us in Japan, and in both companies, we have been successful and expect to continue to do well with several self-help and instructional titles by local authors.

Digital Publishing and Portfolio Growth
Our significant investments in the digital future are beginning to see results. Thanks to the successful introduction of the Amazon Kindle and continuing support for the Sony Reader, our e-book revenue in the United States for the first six months of 2008 is double our e-book revenue for all of 2007. It is still a tiny source of revenue for us, but it will grow quickly as we continue to make more of our titles available for downloading and more people adopt the new reading devices. Our e-book publishing program is well underway in Germany and Canada and will debut in the United Kingdom next month, timed to the launch there of the Sony Reader.

We have strengthened our publishing portfolio with acquisitions and start-ups since January. In the United States, we acquired The Monacelli Press, a leading visual arts publisher, and Watson-Guptill Publications, a leading publisher of art instruction and craft titles. In Germany, we welcomed Hugendubel Verlage, the prominent publisher of self-help books, and Prestel Verlag, renowned for art books in German and English. The U.K. Group achieved significant organic growth with the launch of Transworld Ireland and six new imprints, including Preface and Bodley Head.

The Best Is Yet to Come
Despite the gloom over the economy and the uncertainty about its improvement, there are good reasons for us to think positively.