In March, I reported on Random House's performance for the year 2007. Revenue fell 5.6% to $2.39 billion and EBIT (earnings before interest and taxes) dropped 4.9% to $225 million.
The Direct Group's [direct-to-consumer businesses] 2007 revenue fell 4.1% and Bertelsmann's Chairman Hartmut Ostrowski said the company had decided to sell the Direct Group North America.
In May, Bertelsmann named Markus Dohle to be the new Random House chief executive, replacing Peter W. Olson who had been CEO since 1998. The hope was that Dohle, who had no publishing experience, would open up new lines of business to revitalize Random House.
In July, the sale of the Direct Group North America business in the United States, including "book, DVD and music club brands [like] Doubleday Book Club, Book-of-the-Month Club, Mystery Guild, Black Expressions and Columbia House," was completed.
Bertelsmann also announced plans to sell off its book and music clubs in Australia and in several countries in Europe as well as its book clubs in China.
Both Publishers Marketplace and The Bookseller had articles on Bertelsmann yesterday.
The Bookseller had this to say:
[Bertelsmann's Chairman] Hartmut Ostrowski's desire to set out a new growth strategy for Bertelsmann is turning into a battle between the expansionist ambitions of its new management team and the constraining financial legacy inherited from his predecessors, reports the FT [Financial Times].Mr. Ostrowski became chief executive of Bertelsmann on Janu-
ary 1 of this year and has been cleaning house ever since. In addition to selling off pieces of the book clubs, he sold his company's 50% share in its joint venture with Sony to Sony.
The Financial Times says:
Such moves were necessary not just to trim Bertelsmann down to its better-performing businesses, but to put its debt load behind it and find new funds for expansion.Publishers Marketplace had this to report yesterday:
We know what they're selling, but it's not exactly clear what they want to be buying and why. "His hopes of building an education business have puzzled some followers, as established educational publishers such as Cengage and Pearson, owner of the Financial Times, are so large that any deal could dilute the Mohn family holding."Bertelsmann is a privately held company owned by its founding family, the Mohns, and by the non-profit Bertelsmann Foundation that was set up by the Mohn Family.
As for their expressed interest in evaluating a bid for Reed Business Information through their Gruner + Jahr unit, Ostrowski tells the paper "whether we'll even make a binding offer isn't clear at the moment."
So, it's clear that Bertelsmann is moving away from its book clubs and music clubs, but whether it wants to enter the education publishing business is still unclear. And how (or if) this new direction will impact Random House is still uncertain.