Monday, May 05, 2008

Olson to Leave Random House (+ Middelhoff News)

The NYTimes has confirmed via two executives at Random House corporate owner Bertelsmann that Peter Olson will be leaving his position as CEO of Random House in the next few weeks.

Mr. Olson, who has run Random House, the world’s largest consumer publisher, since 1998, has come under mounting pressure in recent months as Bertelsmann’s financial results have been damaged by lower profits at Random House and steep losses in its American book clubs, which he also oversees.

It was not yet clear who will replace Mr. Olson, although these executives said it would not necessarily be a prominent figure from New York publishing, and maybe not even an American.

Surely not a non-american!

On a related note, Thomas Middelhoff took exception to comments The Economist made in an article on Bertelsmann under incoming CEO Ostrowski. Among them the following:

Perhaps because he has Arvato up his sleeve as a source of future growth, Mr Ostrowski appears to be far less interested in the internet than other media bosses. Losses made by Mr Middelhoff's internet ventures may also contribute to his caution. “I will not put a bet on one or two big internet investments; we must build an online presence organically,”

His rebuttle in the letters to the editor was as follows:

Bertelsmann's performance
SIR – I do not agree with the statements in your recent article (Face value, March 22nd) concerning my term as chief executive of Bertelsmann. The development of the company between 1998 and 2002—ie, the creation of the RTL Group, the acquisition of Random House, etc—have not “strained” Bertelsm€ann's finances in any way. At the time of my retirement its debt amounted to €334m (with revenues of €20 billion). RTL Group today contributes more than 50% towards Bertelsmann's profit.

I also do not agree that my “internet ventures” were costly in general. Selling the company's AOL shares and its 50% stake in AOL Europe and the sale of mediaWays, an internet-service provider, generated a profit of €10 billion.

In the three-and-a-half-years of my leadership Bertelsmann doubled its revenue, tripled its operative profit and quintupled its net equity. Not a bad result compared
with the company's present situation, almost six years after my resignation.

Thomas Middelhoff
Chief executive
Essen, Germany

€10 billion profit isn't too bad now is it?

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