The New York Times describes German media giant Bertelsmann as "the world's largest English-language trade publisher, with combined sales of about $2 billion. As of 2004, the company is publishing about 8,000 books a year and has a backlist catalog of some 50,000 titles, employing about 5,300 people worldwide."
Last week, Bertelsmann, parent of Random House, issued financial results for the nine months ending 9/30/06. Those results weren't pretty.
The Associated Press (AP) reported that "profit in the first nine months of the year almost halved."
While the company didn't provide the quarterly figures, they did indicate that the net profit fell to 243 million euros for the nine months, a drop of 49% when compared to the 475 million euros for the same period last year.
The AP reported "the decrease in earnings was the result of tax expenses along with special items, including a 48 million euro ($61.2 million) settlement with Universal Music Group over a lawsuit involving the former music file-sharing platform Napster."
After the first six months that ended in June, Yahoo reported "profit at Random House and the Gruner + Jahr magazine unit was flat."
Mediabistro's Galleycat reported breaking news on Friday morning (courtesy of Shelf Awareness):
Random House has apparently cut 20-30 members of its sales force, mostly reps both in the field and New York office as well as a few people in sales management. Another 10-20 may have been let go in operations and IT. Some of the reps who have been laid off have decades of service with the company. The accounts serviced by the departing reps will apparently be handled by remaining reps. Cuts in other parts of Random House are rumored.
This is not the first time that Random House has made news by axing staff. The company has a long history of spilling corporate blood, although the spectacular firings have usually been much higher up on the food chain.
In 1980, RCA sold Random House to S.I. Newhouse, a billionaire newspaper magnate. Nearly a decade later, in 1989, Newhouse fired "Robert L. Bernstein, who . . . [had] been head of Random House for 23 years." (New York Times).
Newhouse brought in Alberto Vitale who, according to Andre Schiffrin, was "an Italian banker with no interest in books except as sources of revenue." Vitale cut two-thirds of the staff and publication list.
Katherine McNamara's Institutional Memory says, "During the early- to mid-‘90s, Vitale reorganized 'big' Random House. He neatly tri-sected the trade division. Having consisted of between eleven and sixteen imprints, it was now re-arranged into three groups: the Knopf Group, the Random Group, and the Crown Group."
In 1998, Bertelsmann, the German media conglomerate, acquired Random House. In 2003, The Nation reported that Ann Godoff, "the highly regarded head of the Random House Trade Group, heir to the old Random House, was summarily fired by Bertelsmann's American chief, Peter Olson . . . on January 16 . . . The reason is very clear. Olson made a point of saying in his memo that Random House was 'the only . . . division to consistently fall short of their annual profitability targets.'"
According to Friday's Publishers Weekly:
In a restructuring of the Random House sales force, a “small number” of sales positions have been eliminated and some reps are taking on expanded duties to cover retirements, RH spokesperson Stuart Applebaum confirmed. He said a report in Shelf Awareness that as many as 30 positions were cut was “inaccurate.” He reiterated the total number of positions affected were a “small fraction” of the overall sales group, “which numbers in the hundreds” including “dozens” of field reps.
According to Applebaum, the restructuring is a response to the “ever-changing book marketplace.” It is Random’s intention, he said, “to provide the same level of sales attention and follow-through and marketing support to which our accounts have long been accustomed.”
Applebaum added that there are “no further restructurings planned for this year” at Random.
I suspect any further restructurings will depend upon the 2006 year-end results reported sometime in January or February.