PW: Bertelsmann, Random Report Strong Years

Bertelsmann reported a 23% rise in sales in fiscal 2000 to 32 billion deutsche marks ($15.4 billion). A good part of that increase came from the consolidation of TV and film operations (the alliance between Bertelsmann's UFA studios and the European TV network CLT) and from its book and music operations. The Gutersloh group points out that based on revenues, Bertelsmann is number three among media groups, following AOL Time Warner and CBS Viacom. It also noted that Bertelsmann did not make a major acquisition during the 1999/2000 business year, which means that upwards of $7 billion is available for "strategic" investments.

In a memo to Random employees, chairman Peter Olson and president Erik Engstrom reported that the publisher had "superb operating results" in fiscal 2000 and showed "a significant improvement over last year." Among the factors that contributed to the record year were several million-copy-plus hardcover sellers, including The Brethren, Hannibal, The Greatest Generation, The Greatest Generation Speaks, Tuesdays with Morrie and the novels of Danielle Steel. Olson and Engstrom also made a point of reinforcing Random's commitment to mass market paperbacks, observing that almost one-third of its 145 New York Times bestsellers were rack-sized paperbacks. "We are deeply committed to the future of the mass market paperback," the two wrote.

During the year, Random transferred 36 million books from the old Bantam Doubleday Dell warehouse in Des Plaines. Ill., to the expanded Westminster distribution center, and the Des Plaines facility is due to be closed soon. The year also saw the implementation of SAP for publishing operations, the relocation of the Ballantine distribution operations to Westminster and the activation of SAP and MARC in Westminster and Canada. The men noted that Random will "continue to make the substantial investments necessary to render SAP and all our other systems as flexible and user friendly as they are state of the art."

The Random executives further promised that the company will invest aggressively in new technology, services and alliances. "We see our ever-expanding editorial-content digital archive as the hub of our new technology endeavors, allowing us to take full advantage of electronic publishing, short print run/print on-demand digital publishing and Web retailing and marketing," they said. More electronic and digital publishing announcements are expected to be made this summer. But despite the various electronic publishing and infrastructure investments, Olson and Engstrom noted that "our publishing programs will continue to be our foundation as well as the main engine for our growth."

Another memo issued last week addressed quality-of-life issues. The company created a buzz earlier this year when it raised starting salaries to $30,000. Last week Random announced that effective January 1, 2001, all employees will be given an additional five vacation days. Fulltime employees with less than one year of service will be eligible for 15 vacation days, while 25-year veterans are entitled to 30 days.

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