Photo: Bloomberg
Photo: Bloomberg

Bertelsmann betting on ink and paper as e-books falter

Bertelsmann is poised to boost its 53% stake in Penguin Random House after partner Pearson said it plans to sell its 47% share

Remember books—you know, those things printed in ink on paper? They’ve been killed by the advent of e-readers such as the Amazon Kindle, right? Nope. Sales of physical books have risen for the past three years in the US, and Thomas Rabe sees big profits in selling them.

Publishing “is and will remain one of our strategic core businesses," says the chief executive officer of Bertelsmann, a German conglomerate founded in 1835 as a printer of church hymns that today employs 117,000 in TV, magazines, education and more.

Rabe is poised to boost his 53% stake in Penguin Random House after partner Pearson said it plans to sell its 47% share. Penguin Random House, the world’s No. 1 book publisher, in 2015 increased sales to €3.7 billion (around Rs29,200 crore) from €2.7 billion in 2013. That’s thanks to its foothold in fast-growing markets such as India and blockbusters like Paula Hawkins’s thriller The Girl on the Train and E.L. James’s Fifty Shades series.

Profits at the publisher in 2015 jumped by more than half from the year before, to €557 million, and Pearson’s stake could fetch $1.5 billion, Liberum Capital estimates.

Pearson announced the sale on 18 January as it acknowledged major challenges in its biggest business, US higher education, after months of optimistic forecasts from CEO John Fallon.

While Bertelsmann, controlled by Germany’s billionaire Mohn family, hasn’t laid out specifics, Rabe says he’s interested in buying out Pearson. “We will do everything to guide this business to further growth," he says. Bloomberg