Despite a tumultuous first half of 2023 that included layoffs and buyouts affecting some of the most experienced people in its U.S. division, sales at Penguin Random House rose 9.5% in the first six months of 2023 over the comparable period in 2022. Still, operating earnings only increased by €1 million, to €258 million ($282 million).
In a letter to employees, interim global CEO Nihar Malaviya wrote that the small profit increase “should come as no surprise, as industry inflationary cost pressures and increased costs across our businesses have continued to impact us.” Malaviya added that “we have already taken several steps to offset these pressures in some of our markets around the world and will continue to carefully navigate these industry and structural dynamics.”
The increase in sales, which rose from €1.92 billion in the first half of 2022 to €2.10 billion ($2.29 billion) in the most recent period, was due in part to a series of small acquisitions. The most notable of those was the acquisition of another 8% interest in Sourcebooks, which gave PRH a 53% stake in the publisher. With its majority interest, PRH has incorporated Sourcebooks’ revenues with its own, with PRH parent company Bertelsmann noting that “Sourcebooks has contributed €71 million to revenue and €7 million” in profits since its “initial acquisition.”
PRH made two other U.S. acquisitions in the year, including the May purchase of the assets of Callisto Media, which are being managed by Sourcebooks. According to Bertelsmann, PRH paid €63 million for Callisto, of which €57 million was paid in cash. In addition, a loan of €7 million was repaid as part of the transaction. Since its purchase, Callisto added €2 million to revenue and “an immaterial amount to group profit or loss,” Bertelsmann said. If Callisto’s financials were reported for the full six months of the year, the publisher would have contributed €13 million to revenue and a €27 million loss.
The third U.S. purchase was of the audiobook company Playaway Products. Outside of the U.S., Penguin Random House Grupo Editorial fully acquired Barcelona-based Roca Editorial, one of Spain’s leading independent publishers, in May
From existing operations, the big sales driver was Prince Harry’s memoir, Spare. By the end of June, PRH companies had sold about 5 million copies of the memoir. The bestselling new fiction title was Happy Place by Emily Henry, while Atomic Habits by James Clear remained the bestselling backlist title. In children’s books, Dr. Seuss classics again sold millions of copies, Bertelsmann said. Audiobook sales were also strong. Distribution sales, particularly at the U.S.-based Penguin Random House Publisher Services, did well; across all countries, total distribution sales rose to €79 million, from €78 million.
Bertelsmann noted that “thanks to its strong publishing programs, book sales in the United States, the United Kingdom, and Germany all outperformed the respective book markets. The Spanish and Portuguese publishers recorded revenue growth.”
Malaviya was cautious in assessing the remainder of 2023. He noted that, while industry sales remain higher in 2023 compared to 2019, the most effective way to combat new costs is to “achieve great commercial success” by investing “in more authors’ works and bring more voices and stories to readers.”