PW: Bertelsmann's Buy of Random Completed

John F. Baker |

Jul 06, 1998

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Bertelsmann's Buy of Random Completed
John F. Baker -- 7/6/98
Engstrom will be president and COO; Olson stresses continuity, imprint autonomy
The deal is done. On July 1 Bertelsmann announced it had completed its acquisition of Random House from Advance Publications, thus creating the largest trade publisher in the English-speaking world, with sales of about $1.8 billion.

To no one's surprise, Peter Olson, who now becomes chairman and CEO of what will be called Random House Inc. (and will include the former Bantam Doubleday Dell), chose Erik Engstrom, who had headed BDD North America, as president and COO of the new entity. Former Random chairman and CEO Alberto Vitale becomes chairman of the company's newly created supervisory board.The completion of the acquisition, which observers believe had been scheduled to occur just within Bertelsmann's financial year, ended more than three months of controversy and speculation over whether it could be accomplished because of what some saw as possible antitrust objections from the Federal Trade Commission. Authors and agents had made strong representations to Washington that the combined companies would represent a lessening of choice for publishing their works -- arguments the commissioners rejected.

There has been particular anxiety among the agent community over whether the many Random imprints will continue to be able to bid independently for books, a point that seemed to be addressed by Olson in a statement circulated to the company's employees worldwide, in which he said: "As we begin this new era for our company, our byword is continuity: continuity of editorial autonomy of each of the publishing divisions and imprints of BDD and Random House."

The leadership team, all of whom will report to Olson, includes, in addition to Engstrom, Bantam's Irwyn Applebaum, Dell's Carole Baron, Crown's Chip Gibson, Random Trade's Ann Godoff, Ballantine's Linda Grey, Knopf's Sonny Mehta, Doubleday's Stephen Rubin and Broadway's William Shinker. Mark Barty-King at London's Transworld, Gail Rebuck at Random U.K. and Brian Davies, president of Random International (covering Australia, New Zealand and South Africa), will also report to him, as will Stuart Applebaum, BDD senior v-p and director of public relations, who will be corporate spokesman for the new company, "working closely with William Loverd, Random's v-p, corporate affairs."

Engstrom's charges in the new administration include major back-office functions such as sales and merchandising, finance, legal operations, distribution, information technology, human resources and direct marketing, as well as Random's children's and BDD's Young Readers divisions, the Random Information Group, Value Publishing, Fodor's and BDD Audio Publishing. BDD and Random in Canada will also be his reports. Engstrom is planning to announce appointments in these areas next week.

Engstrom, who is only 34, joined BDD seven years ago from a management-consultant background as v-p of corporate development and became COO in 1994 and president in 1996. Last February he was named to head BDD North America as president and CEO.

Olson said the integration of the two giant companies in their many worldwide operations will be "a gradual process, and one that ideally will minimize disruption and dislocation for all of us." A spokeman said the two companies will remain in their present separate locations "for the foreseeable future."
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A version of this article appeared in the 07/06/1998 issue of Publishers Weekly under the headline: