The lack of a new major bestseller was one factor in driving sales and earnings lower last year, compared to 2015, at Penguin Random House. According to PRH parent company Bertelsmann, revenue at the world’s largest trade publisher fell 9.6% in 2016, to 3.4 billion euros, while EBITDA (earnings before interest, taxes, depreciation and amortization) declined 3.6%, to 537 million euros. Figures include results from Verlagsgruppe Random House, the German publishing group wholly owned by Bertelsmann.
The lack of a breakout smash contributed to declines in both print and e-book sales but sales of digital audiobooks remained strong, Bertlesmann said. In addition, revenue was negatively affected by currency changes and asset sales. In the U.S., PRH sold Author Solutions (closing the deal just before the start of the new year, on December 30, 2015). Last year, PRH also sold Fodor's and Random House Studios.
Highlighting the hit books PRH had in the U.S., Bertelsmann pointed to multimillion sales of The Girl on the Train, Me Before You, and After You. Other top sellers across print, audio and digital formats included The Whistler, The Underground Railroad and When Breath Becomes Air. Additionally, multi-title Dr. Seuss classics sold more than 11 million copies.
In his letter to employees, PRH CEO Markus Dohle said that despite having “a year that felt challenging for all of us,” PRH raised its operating margin to 16.0%. (Operating margin was 15.0% in 2015). A key to maintaining strong profitability levels, Dohle added, has been PRH’s commitment to “preserving a vital and vibrant bookselling community,” as well as “maximizing efficiencies in our cutting-edge supply chain.”
Dohle also emphasized PRH’s commitment to print, saying the house supported the format “even when it was in decline earlier this decade.”
Looking at 2017, Dohle said the new year has gotten off to a good start “in most of our territories” and that a top priority remains improving the discoverability of PRH books, both in physical stores and online. According to Dohle, PRH also plans to help maintain a “competitive bookselling landscape,” and to accelerate its diversity efforts “in the content we publish and promote, and of course under our own roof.”
Diversity, Dohle wrote “is essential in our timeless pursuit of our larger purpose—to create the future of books and reading—as we provide an unmatched platform for a full range of voices, ideas, and opinions." He went on: "In these tumultuous times, this will be an even more urgent and important goal for our publishing programs as we serve readers across the spectrum.”
In a comment on the recent signing of Barack and Michelle Obama to huge book deals, Dohle observed that all of the company's employees "will be able to share in these publishing experiences through our globally coordinated publication of both books in all our territories.”
In a press conference in Germany, Bertelsmann CEO Thomas Rabe reiterated that the company, which currently owns 53% stake in PRH, is interested in raising its stake to 70% to 75%. Earlier this year, Pearson said it was looking to sell its 47% share of PRH.
For all of Bertelsmann, revenue slipped slightly to 17.0 billion euros, from 17.1 billion euros in 2015. However, EBITDA rose to 2.57 billion euros, from 2.49 billion euros. The improved profitability came despite investments in its new education group, which lost 17 million euros on 142 million euros in sales.