Penguin Random House is the world’s leading trade book publisher, comprised of nearly 250 imprints and brands on five continents, with more than 15,000 new titles and 800 million print, audio and e-books sold annually. The company employs 10,582 people globally and was formed on July 1, 2013 by Bertelsmann and Pearson, who own 53 percent and 47 percent, respectively.

PRH is owned by Bertelsmann, an international media company that operates in fifty countries in broadcasting (RTL Group), magazine publishing (Gruner + Jahr), services (Arvato), and printing (Be Printers).

PRH’s best known imprints are Doubleday, Viking and Alfred A. Knopf in the US; Ebury, Hamish Hamilton and Jonathan Cape in the UK; Plaza & Janés and Alfaguara in Spain; Sudamericana in Argentina); and the international imprint Dorling Kindersley.

The German-language publisher Verlagsgruppe Random House is not part of PRH from a legal point of view, but is under the same corporate management and is part of the Penguin Random House operating division.

The Bertelsmann Education Group was consolidated and added to Bertelsmann‘s Annual Report in 2016, and comprises Bertelsmann’s education activities. The digital education and service offerings are primarily in the healthcare and technology sectors, which demonstrates Bertelsmann's continued progress as a fast-growing, digital, international group.

Analysis and & Key Developments

Financial

Bertelsmann’s group revenues from continuing operations declined by 1.1% in 2016, from 17.1 billion EUR to 17 billion EUR. The loss is primarily due to negative exchange rate effects, disposals, as well as declining organic revenues at Penguin Random House and Bertelsmann Printing Group. Despite start-up losses for digital and new businesses the operating EBITDA increased by 3.3% to 2.6 billion EUR during 2016.

Revenues at Penguin Random House declined by 9.6% from 3.7 billion EUR to 3.4 billion EUR, due to portfolio and exchange rate effects. The organic growth was -3.9 %, impacted by a decline in e-book revenues that was partly due to new sales conditions in the retail market.

During 2016 the newly formed Bertelsmann Education Group performed positively. The segment generated a revenue increase of 28.9% compared to 2015, with a total of 142 million EUR. Operating EBITDA fell to -17 million EUR from the acquisition in 2015 of HotChalk and Udacity.

Internal Organization

Bernd Hirsch was appointed new Bertelsmann Chief Financial Officer in January 2016. Hirsch took over from Executive Board Chairman Thomas Rabe, who had performed this function in addition to his other responsibilities.

John Makinson announced his retirement as chairman of PRH in November 2016. His successor is Philip Hoffman, who served on the company’s board of directors since 2013.

Acquisition

In December 2016 the Bertelsmann Education Group expanded its range of acute healthcare services and strengthened its service offerings with the acquisition of Advance Practice Strategies (APS), a provider of e-learning products in the same area.

To expand its author and brand-based merchandising PRH acquired the New York-based company Out of Print in June 2017. The company specializes in creating and selling licensed illustrated literary-themed products.

In July 2017, PRH completed the acquisition of Spanish language Ediciones B.

In January 2017 Pearson announced an interest to sell the company’s shares of Penguin Random House. Bertelsmann chief executive Thomas Rabe issued a statement saying the company is "open to increasing our stake in Penguin Random House, provided the financial terms are fair.”

Divestment

In January 2016 PRH sold its controversial self-publishing division Author Solutions.

In June 2016 PRH Germany sold its imprint Gerth Medien GmbH, which included Adeo. Also in June, PRH announced the divestment of its travel division, Fodor’s, to Internet Brands, a Los Angeles-based online media and technology company.

International

PRH is India’s largest English trade publisher, and it holds a significant stake in Brazil’s Companhia das Letras, one of the country’s leading publishing groups. PRH is also present in China, where it primarily sells imported English-language books.

309 million EUR of PRH’s overall 3.4 billion EUR revenue was generated in Germany, 6.1% less compared to 2015.

Revenues of PRH by region in 2016 include 7.9% from Germany, 0.3% from France, 10.7% from the United Kingdom, 8.3% from other European countries, 56.5% from the USA, and 16.4% from other continents.

Digital

Revenue from digital was moderately higher than in the previous year. Bertelsmann’s book publishers now generate more than 20% of the company’s global revenues in the digital business. In the U.S. this figure is over 25% and growing, despite declining e-book sales in the United States and the United Kingdom. Revenue growth resulted mainly from new retail sales terms.

Bestsellers

PRH’s top sellers in 2016 were Paula Hawkins’s multimillion-selling novel The Girl on the Train and Jojo Moye’s Me Before You and After You.

US

In the United States, 585 of PRH’s print and e-book titles were listed as bestsellers by the New York Times. In addition to the novels by Hawkins and Moyes, top sellers included John Grisham’s The Whistler, Colson Whitehead’s The Underground Railroad, and Paul Kalanithi’s When Breath Becomes Air. The Dr. Seuss classics also sold more than 11 million copies combined.

UK

In the UK PRH published 40% of the top 10 titles on the Sunday Times bestseller lists. Among the top-selling titles were Lee Child’s Night School, the classic children’s books The BFG and Matilda by Roald Dahl, Jeff Kinney’s Wimpy Kid series and Jamie Oliver’s cookbooks, as well as the Hawkins and Moyes titles.

Germany

Top selling titles in Germany included books by Jonas Jonasson, Charlotte Link, and Juli Zeh. Verlagsgruppe Random House placed 397 titles on the “Spiegel” bestseller lists, with 17 at number one.

Spain/Latin America

Penguin Random House Grupo Editorial showed a rising performance in e-book sales. The publisher also reported a strong net savings from its merger and benefited from a lucrative front list on the Spanish Market in 2016.

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