PW: Newhouse: 'If Bertelsmann Hadn't Emerged, We Wouldn't Have Sold'

The 70-year-old billionaire, whose company is returning to what he calls its core business of newspapers and magazines, told PW in an exclusive interview April 2 that the family had decided last year to sell Random "if the right opportunity came along." But he would never, he said, have put Random House up for sale to the highest bidder, which would be "destructive and destabilizing."

Asked about rumors in the industry that Random had been unprofitable or had incurred debts, Newhouse described it "as a very well-run company," and added: "I am very satisfied with the profits. We had resolved a lot of the problems of overpublishing and overprinting, and are gratified with its performance, creatively and financially. It is not true there are large debts; there is almost no debt."

Asked where he sees the business heading at the new combined Random-BDD, he said: "Unlike Warner, which publishes a few books and tries for major frontlist activity, Random has to do both frontlist and publish to niche markets. With the size of the two companies, the future lies in publishing to niches, along with works of broad interest.

"Bertelsmann has not acquired Random House to downsize it, but to expand in the U.S. and worldwide. It is a strategic investment to help them grow," he said. The challenge for the future, Newhouse said, is "how to deal with the variety of ways of marketing books," including the various online operations. "When I started with the business, it was basically a mom-and-pop 125% retail structure."