Driven by strong sales in the U.S. and a 300% increase in digital sales, worldwide revenue at Random House rose 7.7% for the first half of 2010, to 791 million euros ($1.0 billion), while operating EBIT (earnings before interest and taxes) doubled to 40 million euros ($51 million). In his letter to employees, Random chairman Markus Dohle attributed the gains in the U.S. to “bestseller dominance [combined] with lower physical returns.” He commended Random employees for their collaborative, cross-divisional solutions-oriented teamwork, ongoing cost discipline and continued improvements in the supply chain. Results benefitted only slightly from foreign currency changes.
The author with the biggest impact on Random’s first half results was Stieg Larsson; Random has sold a combined 6.5 copies in the U.S. and Germany of his three books in print, e-book, and audio formats. Dohle used Larsson’s e-book success as an example of the overall growth of Random’s e-book operation. “In the past half year we have really embraced digital transition throughout our companies, replacing anxieties about the format with forward thinking and with well-executed action,” Dohle said with Random on track to generate e-book sales of over $100 million (which will roughly be about 5% of worldwide sales). The majority of sales have come in the U.S., but the U.K. and Germany have also seen good gains. E-book publishing operations will soon start in Latin America and Spain.
Dohle emphasized that while Random is embracing all digital publishing opportunities, its goal remains to “ grow our print and digital market leadership as we grow the overall readership for our books.”
Dohle was cautiously optimistic about the remainder of the year. While the economy and consumers are sending mixed messages, he said the fall is always Random’s strongest selling season and the company has a number of potential blockbusters, including books by John Grisham, George Bush, Tony Blair, Ina Gartner and Nora Ephron.