Financial Times FT.com

All eyes on Random House helm

By Gerrit Wiesmann in Frankfurt

Published: May 11 2008 18:25 | Last updated: May 11 2008 18:25

New York-based Random House, the world’s largest book publisher, looks set to be managed by a European executive from outside the book industry after its chief executive, American Peter Olson, announces his departure in the coming weeks. People familiar with Random House’s parent Bertelsmann said that the German media group had decided against promoting Random House UK head Gail Rebuck or German chief Joerg Pfuhl in order to bring a fresh pair of eyes to the business.

In his first high-profile personnel decision, Bertelsmann chief executive Hartmut Ostrowski is expected to opt for a Germany-based executive from either media services division Arvato, the unit he once ran, or book-clubs unit Direct Group.

Company executives are aware such a move could lead to renewed criticism – both internally and externally – that the family-owned TV, books and magazine company is becoming more parochial as rivals such as News Corp become more global.

But Mr Ostrowski is said to place a premium on getting an executive in place at Random House who has built a track record in widening the perspectives of mature businesses – like those at Arvato services or the Direct Group book clubs.

Following a long illness this winter, Mr Olson is in talks to leave Bertelsmann after10 years at the helm of Random House. People who have worked with him have said he is going to make more time for the “life of the mind” he is said to cherish.

Others, however, have said he is leaving after Random House reported weak results for last year – a development Bertelsmann itself has ascribed to slowing consumer demand in the US rather than home-made problems at the publisher.

Shortly before taking the reins at the start of the year, Mr Ostrowski laid out his aim of aggressively increasing Bertelsmann’s sales, one that called into question the performance of slow-growing businesses such as books.

In his time at the helm of Arvato, Mr Ostrowski broadened the scope of a structurally troubled unit. Instead of handling only print contracts, Arvato Print, for example, now offers layout, binding and storage.

That unit is run by 39-year-old Markus Dohle, a high-flyer promoted to the Arvato board in 2006 by Mr Ostrowski – although people close to the company refused to be drawn on possible candidates and Bertelsmann declined to comment.

Direct Group is run by Fernando Carro. He ran the book club division’s successful Spanish business and has helped put it on a broader footing by linking it to bookshops in several European countries.

But Mr Ostrowski has so far shown little sympathy for the long-underperforming business. He is selling Direct Group’s US operations and rescinded the division’s board seat when its then chief executive, Ewald Walgenbach, quit last year.

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