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Bertelsmann's book business achieved "stable" revenues of €3.4bn in 2017, down 0.1% on previous year's revenues (also €3.4bn), with negative exchange rate effects largely offset by portfolio effects, the company has announced. It was described as a "pleasing" result.
The book group's operating EBITDA dropped 2.9% to €521m due to exchange rate effects, while the EBITDA margin stood at 15.5% (16% the previous year).
The UK wing of the company "recorded growth", Bertelsmann said, without specifying figures.
Bertelsmann's book business includes Penguin Random House and the German division Verlagsgruppe Random House; it is understood that without that division, PRH's results showed a slight revenue increase.
Bertelsmann as a whole saw revenue increase to €17.2bn thanks to improved organic growth, with operating EBITDA reaching a record level of more than €2.6bn.
At a Berlin press conference held to announce the results, PRH c.e.o. Markus Dohle (pictured) said 2017 was "another very successful year for Penguin Random House, creatively and financially". It was probably "the most prestigious year in our history", with the company winning all the major literary awards, led by Kazuo Ishiguro's Nobel Prize in Literature and George Saunders' Lincoln in the Bardo taking the Man Booker. Meanwhile R J Palacio's Wonder was the bestselling book of the year with more than four million copies sold, he said.
In 2018, Michelle Obama's Becoming, set for global publication in November is the "most anticipated book" of the year, he said, adding in response to press questions that he was "very confident" that Barack Obama - after leaving first publication to his wife - would be publishing his book in 2019. Another important step for this year will be in Brazil, where PRH wants to gain a majority stake in Companhia Das Letras, Dohle added.
Dohle said there were several reasons that he was optimistic about the global book business. Firstly, it had grown over the last 15 years, the period of the digital transition, with "absolutely stable business models for print and e-books" and digital audiobooks seeing double digit growth last year. There is "healthy co-existence between print and digital", with the two formats standing at 80%/20% worldwide, he said. Meanwhile there are benefits from the growing world population and declining illiteracy, meaning the market is growing each year, with childrens and YA market the fastest growing area for the last 15 years. Finally the demand for book content from the film and TV industry, with the growth of new services like Netflix, is "greater than ever", he said.
"We firmly believe in the future of storytelling and creativity, especially in book form," he concluded.
Reviewing the PRH divisions, Bertelsmann picked out highlights, noting that PRH UK achieved a 43% share of the Sunday Times top 10 bestseller charts, with top sellers including 5 Ingredients by Jamie Oliver, Origin by Dan Brown, and Diary of a Wimpy Kid: The Getaway by Jeff Kinney. In the US, PRH placed 461 titles on the New York Times bestseller lists, including 61 at number one, with major successes including R J Palacio's Wonder, Dan Brown's Origin, John Grisham's Camino Island and The Rooster Bar and Paula Hawkins' Into the Water.
Penguin Random House Grupo Editorial enhanced its position as the largest publisher in Latin America and its market position in Spain, with bestsellers including Una Columna de Fuego (A Column of Fire) by Ken Follett and Mas alla del Invierno (In the Midst of Winter) by Isabel Allende. In Germany, Verlagsgruppe Random House "maintains its market-leading position" despite "the industry-wide impact of declining consumer traffic in bookstores", with 401 titles on the Spiegel bestseller lists, including 22 at number one, with Maja Lunde's Die Geschichte der Bienen (The History of Bees) as the bestselling book in Germany in 2017.
In a letter to all staff, Dohle wrote: "I am proud that in an evolving marketplace, our teams came together once again to turn challenges into opportunities. Our achievements required focus, creativity, and relentless drive toward what could be possible. Our successes last year demonstrate the solidity and robustness of our global family of publishing companies."
"On July 1st, we will celebrate the fifth anniversary of our merged company. Over these early years in our history we have demonstrated that we are champions of diverse voices, opinions, ideas, and stories. Through our shared efforts and social impact, we are enriching our local and global communities in ways I never could have imagined in 2013. Thank you for everything you have done since then, and continue to do each day, to better the world through the books we publish."
Bertelsmann chair and c.e.o. Thomas Rabe said that, following its purchase of a further stake in Penguin Random House during the year, raising its holding to 75%, Bertelsmann now holds strategic majorities in all its divisions. "For us, Penguin Random House and book publishing is a core business, and has been for 180 years, and the transaction made a lot of financial sense - we increased our share of the results of Penguin Random House on an annualised basis by €80m, that's quite significant, and the price we agreed with Pearson was appropriate, for them and for us, so we came to a very clear and fair deal," he said.
He raised the issue of competition with the global technology platforms as being one of "high strategic relevance" for Bertelsmann, saying: "Competition is a good thing, and we are facing up to the new players - with quite a bit of success. Every year, we invest around €5bn in premium content. We offer our customers high reach and safe advertising environments. And we work closely with the platforms where it makes sense. What is currently lacking is a level playing field between the tech platforms and media companies due to unequal regulation, for example, in the application of competition law or the regulation of the advertising markets."
On Brexit, he noted the continuing lack of clarity in the UK approach. "The UK does not seem to have defined yet what the future relationship with the European Union is going to be, it seems to prefer an a la carte relationship, which is very difficult to achieve. I hope we will find out in the next weeks, but the UK seems to have ruled out a customs union and seems to have ruled out continuing to be part of the internal market, that means there will be a trade agreement." But he welcomed the apparent agreement extending the transition period to the end of 2020, saying it offered "more time to adapt".
He noted: "The impact on us is many-fold - the pound has lost significantly since the Brexit vote, that clearly translates to our pound profits translated into euros; apart from that, our businesses - that applies to Brexit and also a number of other debates - are largely local businesses, we are a multi-local global company, therefore we are much less exposed to tariffs or non-tariff barriers; what we are interested is being able to license copyrights across borders without withholding taxes and the like, and we very much hope that Brexit will be structured in such a way that there will be no friction on copyrights and withholding taxes. And on that basis, we will effectively maintain our UK businesses as they are."
He spoke of his concerns that the furore over Facebook and Cambridge Analytica would affect the appropriate commercial use of data by those who had always observed data protection laws. "While we are very much in favour of data protection, there has to be a balance between data protection on the one hand and the appropriate use of commercial data on the other hand; and I'm a little bit concerned that in this political debate about Facebook and the use of data, this balance will go in the direction of data protection and the appropriate use of data in business models will be affected," he said.