Bertelsmann is an international media company with divisions in broadcasting (RTL Group), book publishing (Penguin Random House), magazine publishing (Gruner + Jahr), music (BMG), service provider (Arvato), education (Bertelsmann Education Group) as well as investment (Bertelsmann Investments) and printing (Bertelsmann Printing Group) operating in fifty countries.

With more than 250 imprints, brands on six continents, 70,000 digital and 15,000 print titles published annually as well as more than 100,000 eBooks available worldwide, Penguin Random House is the world’s largest trade book publisher. The company, which employs 10,615 people globally, was formed on July 1, 2013 by Bertelsmann and Pearson, who own 75% and 25%, respectively.

PRH’s largest imprints are Doubleday, Viking and Alfred A. Knopf (United States), Ebury, Hamish Hamilton and Jonathan Cape (UK), Plaza Janés and Alfaguara (Spain) and Sudamericana (Argentina), as well as the international imprint Dorling Kindersley.

German language Verlagsgruppe Random House is not part of Penguin Random House 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, which has been consolidated and added to Bertelsmann‘s Annual Report in 2016, comprises Bertelsmann’s education activities. The digital education and service offerings are primarily in the healthcare and technology sectors. E-learning providers Relias and Udacity are also part of the group.

Analysis Key Developments

Financial

In 2017 Bertelsmann’s group revenues rose by 1.4% to 17.19 million EUR (previous year: 16.95 billion EUR), driven by organic growth of 1.7%. The bulk of the revenue came from TV, music, services and education businesses. The operating EBITDA increased by 2.7% from 2.57 billion EUR in 2016 to 2.64 billion during 2017.

During 2017 revenues at Penguin Random House remained stable at 3.36 billion EUR (previous year: 3.36 billion EUR). Negative exchange rate effects were largely offset by portfolio effects. PRH’s operating EBITDA declined by 2.9% from 537 million EUR to 521 million EUR in 2017, particularly as a result of negative exchange rate effects. Bertelsmann increased its ownership share in PRH to 75% in October.

The Bertelsmann Education Group recorded overall growth both in revenues and earnings during 2017. Therefore revenues rose from 142 million EUR to 189 million EUR and the operating EBITDA at Bertelsmann Education Group increased to 3 million EUR (previous year: -17 million EUR), primarily due to the organic growth of the e-learning provider Relias.

Internal Organization

In November 2016 John Makinson announced his retirement as chairman of PRH. His successor, starting with 2017, is Philip Hoffman, who since 2013 served on the company’s board of directors.

In April 2018, PRH named previous Penguin Publishing Group president Madeline McIntosh CEO of Penguin Random House US, a newly created position.

Also in April, PRH announced that Allison Dobson, formerly senior vice president of strategy and finance at Penguin Publishing Group, would succeed Madeline McIntosh as president of Penguin Publishing Group.

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

In July 2017, PRH completed the acquisition of Spanish language Ediciones B from Spain’s Grupo Zeta media group.

In October 2017, Bertelsmann increased its shareholding in Penguin Random House to a strategic 75% majority by acquiring another 22% from co-shareholder Pearson, thereby strengthening its governance rights. Pearson remains a co-shareholder of Penguin Random House with a share of 25%.

Also in October 2017, PRH acquired Seattle-based Sasquatch Books for an undisclosed price and Ebury, PRH UK’s non-fiction publisher, launched the new imprint Pop Press. The imprint publishes 20 titles per year with a focus on gift books.

Random House re-launched One World to revitalize and expand the historic publishing program, originally established in 1991 as the first multicultural imprint at a major publishing house.

In November 2017, PRH Grupo Editorial launched its new religious imprint for Spanish-language books, which features titles on self-help, relationships, and the Christian-based lifestyle imprint Origen.

In January 2018, PRH Australia launched Penguin Life, an imprint focused on personal development and healthy living, which publishes six books a year.

In February 2018, PRH India announced the launch of its new digital imprint Penguin Petit, which will offer a broad range of interests, from fiction, nonfiction, children’s literature, mythology to self-help, history and current affairs, and will be available in an e-book format.

Also in February Penguin Young Readers announced the launch of Kokila, a new imprint, which will release its first list of books in the summer of 2019.

International

Revenues of PRH by region in 2017 represent 7.4% from Germany, 0.5% from France, 11.6% from the United Kingdom, 8.3% from other European countries, 55.3% USA, and 16.9% from other countries. RH Germany contributed only 292 million EUR to the company’s revenues, falling under 300 million EUR for the first time since 2008.

Digital

While print book revenues remained broadly stable overall, and e-book sales declined moderately, Penguin Random House again recorded strong growth in digital audiobooks.

Bestsellers

PRH authors were honored with numerous major international literary awards in 2017. Kazuo Ishiguro, who is published by Penguin Random House, won the Nobel Prize in Literature. The publishing group’s authors also received four Pulitzer Prizes, two Man Booker Awards, and a US National Book Award.”

In the United States, PRH placed 461 titles on the New York Times bestseller lists in 2017. In addition to R.J. Palacio’s Wonder, the year’s major success, bestsellers included Origin by Dan Brown, Camino Island and The Rooster Bar by John Grisham, and Into the Water by Paula Hawkins. In addition, almost ten million copies of children’s book classics by Dr. Seuss were sold.

In 2017, Penguin Random House UK publishers recorded growth and achieved 43% of all top 10 titles on the Sunday Times bestseller lists. Top sellers included 5 Ingredients by Jamie Oliver, Origin by Dan Brown, as well as Diary of a Wimpy Kid: The Getaway by Jeff Kinney.

Die Geschichte der Bienen (The History of Bees) by Maja Lunde was the bestselling book in Germany in 2017. The publishing group had 401 titles on the Spiegel bestseller lists.

During 2017 PRH enhanced its position as the largest publisher in Latin America and its market position in Spain. Its bestselling titles over the year were Una Columna de Fuego (A Column of Fire) by Ken Follett and Más allá del invierno (In the Midst of Winter) by Isabel Allende.

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