John Koblin checks in with Dean Baquet, The New York Times' Washington Bureau Chief who tells him, “It is a huge moment for the bureau and it is a huge moment for the paper."

Leon Neyfakh writes, "Maybe it’s all the inauguration business going to Pub Crawl’s head, but at the end of the day, you kind of have to hand it to Markus Dohle. The guy came out of nowhere—knew next to nothing of American book publishing when tapped last spring at the age of 39 to become CEO of Random House Inc.—and succeeded against all odds in drafting the blueprint for a radical restructuring of the company that not only didn’t inspire widespread contempt among his new American colleagues, but was met to a large degree with reluctant approval."

Gillian Reagan meets Aaron Cohen, who's making a documentary called The Aaron Cohens, all about... Guys named Aaron Cohen. "There's 1,187 Aaron Cohens in the world," Mr. Cohen says. "We're going to try to meet all of them."

Plus: George Gurley's emails... Moira Hodgson's memoirs... Begley the Bookie.

Prior to his appointment, as everyone knows by now, Mr. Dohle was running a printing company in Germany, and understood the business of books about as well as one might expect the foreman at a cement factory to understand the art of sculpture. The fact that it only took him six months of door-to-dooring everyone at 1745 Broadway to come up with a halfway-decent plan—not to mention the fact that he did it without hiring an adviser from inside the company who could tell him what was what—indicates that the man is a remarkably quick study.

Now, the feeling among both literary agents and executives who used to work at Random House seems to be that Mr. Dohle inherited a rotten, bloated thing when he took over last May, and though one can wish it hadn’t gone the way it did, there simply was no reversing the damage done by his predecessor, Peter Olson, without forcing the publishers who’d survived his thoughtless 10-year reign to make some hard calls.

To be sure, the casualties that accompanied Mr. Dohle’s reconfiguration of Random House—around 50 confirmed in the press, but by some internal estimates closer overall to 100—made many observers wince, as dozens of beloved editors, publicists, marketers and production people were laid off over the course of the last month after many years of service to the company.

It was obvious, of course, that no sooner than Mr. Dohle’s reorganization plan was announced on the morning of Dec. 3, those cuts would come. The fact that they came as gradually as they did—names trickled out in a steady stream starting about a week before Christmas—provoked some executives at other houses to criticize (on background, of course) what they saw as an inhumane process that should have been more closely coordinated among the three divisions and deployed all at once. 

The final round of cuts, reflected in memos sent to staff last week by the company’s three remaining division heads, saw the elimination of several high-level positions, starting shortly after the New Year with that of Pantheon publishing director Janice Goldklang, and continuing with those of Villard publisher Bruce Tracy, Modern Library editor Judy Sternlight and Bantam Dell editor Toni Burbank, who had been with the company for more than 40 years and was recently given a lifetime achievement award for her work in health and self-improvement literature by the Multiple Sclerosis Society.

The list goes on and on, and the more pins one sticks into the map, the more one wishes some angel investor would come along and open a new house—hell, even one that just published ebooks!—that would employ all the talent out there now roaming free.

As it stands, everyone at Random House is about to get a lot busier—not just because there are fewer hands on deck in the wake of the reorganization, but because for the past six weeks, so many in the building were frozen in their seats in anticipation of cuts and were forced to put their work on hold until they knew what was happening to them. Agents reportedly slowed submissions to the house as well, and one must assume—since December and January are said to be slow months anyway—that they will resume at full speed now that all changes compelled by Mr. Dohle’s restructuring have been made.

As for Mr. Dohle, the question of what he will do and how he will lead now that his first major task—and this “evolutionary” year, as he called it in his Dec. 18 letter to staff—is behind him is one that only he knows the answer to. That he will exert more force over his charges than his notoriously hands-off predecessor is certain. Exactly what form that force will take—perhaps he will follow Random House’s Canadian division in imposing a ban on intradivisional bidding; perhaps he’ll be less shy than Peter Olson was about saying no when asked to spend millions of dollars at auction—remains to be seen.

lneyfakh@observer.com

The length and complexity of the memo—written by RHPG’s president and publisher Gina Centrello—said it all: This reorganization really hurt, and a lot of people from the group are losing their jobs.

While Ms. Centrello did not specify how many positions would be eliminated in her memo, she did acknowledge the need for staff cuts and devoted a paragraph to expressing gratitude to those who have been let go. Notably, such a paragraph did not appear in analogous memos sent out yesterday by Knopf chairman Sonny Mehta or Crown president Jenny Frost. Asked whether this difference in approach signaled that cuts at the Random House group were more extensive than they had been at the other two divisions, Ms. Schneider said it does not.

"We always do that," Ms. Schneider said. "It's a courtesy to people who have left the company."

As far as who those people are: several sources said Judy Sternlight, an editor at Random House's Modern Library who recently worked on Peter Matthiessen’s National Book Award-winning novel Shadow Country, has been laid off.

Ms. Schneider would not confirm or deny this or any other specific staff change, but noted that control of the Modern Library list—previously under the jurisdiction of RHPG trade paperbacks publisher Jane von Mehren—is being handed over to recently appointed Little Random editor-in-chief Susan Kamil as Ms. von Mehren’s job expands to include oversight of trade paperback operations for Bantam and Spiegel & Grau (mass market at Bantam and Ballantine will be run by Nita Taublib and Libby McGuire, respectively).

Ms. Schneider said that John Flicker, who has been editing non-fiction at Bantam and running its classics line, is moving over to Modern Library as a senior editor and will report to Ms. Kamil. Asked whether the staffing changes at Modern Library—the once-proud classics line that Bennet Cerf ran for two years before opening Random House in 1927—indicate that the character of the books published through the imprint will change, Ms. Schneider said that Mr. Flicker has the background to maintain the brand. She added that most curatorial decisions are made in collaboration with the authors who make up Modern Library's advisory board, which includes Maya Angelou, Joyce Carol Oates, Salman Rushdie, Gore Vidal, and more than a dozen others.

Among the others laid off at the Random House group as part of today’s reorganization is Bruce Tracy, the widely admired editorial director of Ballantine’s Villard imprint. When asked whether Villard would continue as an independent imprint within Random House, Ms. Schneider stressed that she could not confirm the elimination of Mr. Tracy’s position but said that the Villard imprint will continue to exist regardless of whether there are editors dedicated to acquiring for its list.

"No imprint is being eliminated," Ms. Schneider said. "All of our editors feed all of our imprints. Libby McGuire continues as publisher of Ballantine Books, which incorporates Villard as well as several other imprints. We will continue to publish under the Villard imprint."

Other editors laid off as part of today’s reorganization are Anika Streitfeld—who was brought over to Ballantine after she discovered Audrey Niffenegger’s 2003 novel The Time Traveler’s Wife, and more recently worked on Amanda Ward’s How to Be Lost—and Liz Scheier, an editor who specializes in sci-fi and genre fiction and who joined Del Ray in the spring of 2007.

Cuts also took place elsewhere in the company—at least one person was laid off in the art department—but the specifics of those changes could not be confirmed.

Finally, while Paul Bogaards, the publicity director at Knopf, emphasized to reporters yesterday that the reorganization in his division would not require editors there to reduce the number of titles published every year, Ms. Schneider said she could not rule it out for RHPG.

"Our answer to that is too early to tell about title counts," she said. "Those decisions are going to be made over time by each of our publishers."

Full text of the memo from Gina Centrello below:

As news of staff cuts at Random House's American units starts to trickle in, Mr. Dohle asks in his letter that everyone find ways to cut costs. He notes that while "For some, it is a tough message to be asked to consider reducing your spending as part of your daily decision-making, but cost saving is as much a mental as it is a financial discipline."

"The more we save in costs," Mr. Dohle writes, "the more we will have to invest in our publishing."

According to corporate spokesman Stuart Applebaum, the letter has been translated into German and Spanish and will be sent to staff in all 20 countries where Random House maintains publishing operations. Mr. Applebaum said Mr. Dohle, who moved to New York from Germany when he was appointed CEO of Random House last summer, will be handling the German version himself.

The full text of the memo below. 

December 18, 2008

Dear Random House Colleagues,

We soon conclude an evolutionary 2008 for Random House: a year of many publishing triumphs, and a year in which we have begun implementing a strategy and vision for our company that will enable us to come out ahead and build our business profitably amid an almost unprecedented economic downturn. Each of our divisions worldwide has been rethinking, and in some cases reformulating, what we must do to adapt to the changing ways our books are being ordered and sold by our retailers and distributors and purchased and read by consumers. We have faced and will continue to approach these and other challenges directly, confidently, and creatively.

With their abundant publishing and business skills, each of our international divisions achieved much in 2008, and several of them outperformed their flat marketplaces. Overall, our business model is robust.

Verlagsgruppe Random House had an outstanding year, with record sales and profitability in Germany. Random House Mondadori exceeded its ambitious fiscal-year targets, with excellent operating results in Spain and now also in Latin America. The Random House Group UK dominated the London Sunday Times bestseller lists with more #1 titles than any other publisher: an outstanding performance that helped increase market share and outperform the market. Random House Kodansha had a huge success with Randy Pausch’s THE LAST LECTURE, and Random House Korea in a fragmented marketplace surpassed most of its domestic competitors. Random House of Canada achieved its financial goals for the year with a record number of #1 bestsellers and numerous literary-award recognitions. In a most difficult year, Random House, Inc. placed more books than ever before on the New York Times Book Review weekly bestseller lists: 265 titles; 25 at #1.

Momentum ’09:  Creating New Opportunities

Let’s look forward. With the economic forecasts for 2009 growing more pessimistic each day, it is critical for us to have a clear plan for a successful future, focused on increasing creativity, efficiency, and effectiveness. Here are some key components of our strategy.

Investing in Our Publishing Future: It is important for you to know that in 2009 we will continue to spend several hundred million dollars to acquire and market our books worldwide. The publishing power of Random House lies within its more than 130 imprints around the world. They are the core of our entrepreneurial activity and our growth potential.  Their publishing independence and autonomy is ensured and their responsibility to be financially accountable is imperative. Author development remains our publishers’ number one objective.

Becoming Even More Customer-Oriented and Market-Driven: It is hardly a secret that many of our booksellers around the world are struggling. Some have implemented tighter inventory controls, which has a tremendous impact on every publisher’s frontlist and backlist orders. As our customers change their way of doing business with us, we have already begun to help one another with practices to grow their bottom line, and ours. For instance, we increased our efficiency with our customers in the U.K. and Canada by restructuring our field sales force in each country from three to a single national force. In Germany, we instituted “RH 3.0,” becoming the country’s first book publisher to have three, not two, annual sales cycles. This will create greater marketing opportunities and a basis for sales growth in the future. And in the U.S., we are looking at aligning our sales forces even more closely with how most of our customers actually buy our books, by publishing category and format.

Providing Our Customers with the Best Service: With the shift among retailers to ordering lower initial quantities while demanding faster, more frequent replenishment, our Sales & Operations teams worldwide are working to build capabilities that will significantly reduce the time it takes us to re-supply our customers and to respond to consumer demand for our titles. These initiatives also will help offset rising costs and the environmental impact of excess inventory throughout the supply chain. Initial retailer response to the testing of new capabilities has been overwhelmingly positive.

Growing Digitally: More consumers every week are choosing to read books on a screen rather than on paper, making our considerable investments in digital-publishing development and resources vital and necessary. Our e-book publishing programs in the U.K., Germany, and Canada increased significantly in 2008, and we are budgeting for more such growth in ’09. In the U.S., the biggest electronic-publishing market, our e-book sales for 2008 have grown by 400% over last year. Our e-catalog will consist of more than 15,000 Random House, Inc. titles by mid-2009, some of which are now newly available on the iPhone.

Broadening Our Cost-Discipline Approach: The biggest challenge to our bottom line in the coming year will continue to be rising costs. For some, it is a tough message to be asked to consider reducing your spending as part of your daily decision-making, but cost saving is as much a mental as it is a financial discipline. The more we save in costs, the more we will have to invest in our publishing.

Getting Greener: A priority for us in 2009 will be building upon our landmark book-publishing green initiatives.  In the U.S., for example, we will increase our recycled fiber paper targets for our book production to 20% and set a reduced greenhouse-gas emissions target.  In Germany, we take tremendous pride in being the only trade book publisher to use only FSC-certified paper for our books. In the U.K., a carbon-footprint action plan will save 250 tons of C0₂ per annum.

Big Books = Big Year

We cannot allow the economic crisis to overshadow or distract us from the enormous commercial potential of our imprints’ publishing programs for the coming twelve months. We have an amazing lineup of our authors’ hardcovers, trade and mass-market paperbacks, audios, and e-books. They include:

Fiction by Rafael Ábalos, Ann Brashares, Isabel Allende, Martin Amis, Margaret Atwood, Maeve Binchy, Lee Child, Pat Conroy, E. L. Doctorow, John Grisham, Sara Gruen, Mark Haddon, Robert Harris, Carl Hiaasen, John Irving, Kazuo Ishiguro, Ha Jin, Jonathan Kellerman, Sophie Kinsella, Dean Koontz, Stieg Larsson, Charlotte Link, Juan Marsé, Terry Pratchett, Philip Roth, Carlos Ruiz Zafón, Richard Russo, José Luis Sampedro, Danielle Steel, and Anne Tyler. 

Nonfiction from Deepak Chopra, Ann Coulter, Richard Dawkins, Ina Garten, Stephen Hawking, Tracy Kidder, Cesar Millan, Suze Orman, Richard David Precht, Rachael Ray, David Sibley, Delia Smith, Richard Stengel, and Martha Stewart, among many others—and, of course, new readers for President-elect Barack Obama’s two landmark memoirs.

The strength of our 2009 publishing programs clearly illustrates that with every crisis come opportunities. Let us share a commitment to become more resourceful, more accountable, more responsive, and more collaborative as we continue to acquire and publish the best books in the world. Let us take this opportunity to come out of these times stronger than ever as an international team in a global company.  Our future has begun—and it starts with you.

In these final working days of 2008, I want you to know how deeply grateful I am for all you have done for Random House this year. You have made everything we do with our authors, our booksellers, our business partners, and our book buyers possible. Have a safe, fun holiday season. Enjoy your rest.

Sincerely,

Markus

One of those, the source said, has been held for the past five years by Claire Tisne, who has served as sub rights director under Ms. Centrello since back before the 2003 merger that stitched Ballantine together with the flagship Random House group. Ms. Tisne's duties will be taken over by Rebecca Gardner, who has until now been serving the Doubleday Publishing Group. Ms. Gardner will also assume oversight of Bantam Dell's sub rights team, pushing out Sharon Swados, who has led that department for five years.

Ms. Gardner, whom Mr. Dohle's reorganization two weeks ago placed under the command of Knopf president and publisher Sonny Mehta, will lead a sub rights team that includes Lisa George from Bantam, Rachel Kind from Ballantine, and Joelle Dieu from Little Random. Carole Janeway, meanwhile, who has overseen Knopf's rights department, will now said to be "officially" in charge of the rights department of the Knopf Doubleday Publishing Group, which was formed as a result of Mr. Dohle's reorganization.

Carol Schneider, the executive director of publicity for the Random House Publishing Group, said this morning that the sub rights departments are remaining separate operations. "There is no merging," she said. "They are separate and discrete sub rights departments."

While it's possible that more people were laid off yesterday and Media Mob's sources just haven't heard about it, it seems more likely that the layoffs resulting from Mr. Dohle's reorganization will trickle out in a drip rather than crash down in one big wave. And while a little drip may sound like the less painful of the two, it's actually a way more torturous experience for the people of 1745 Broadway, many of whom have been coming in every day since the reorganization was announced not knowing whether it'd be their last.

Note: Originally this post indicated that Tuesday's staff changes would mean some sort of centralization of sub rights at Random House, and speculated that it could be the sign of more such centralization to come. This was nonsense. As Ms. Schneider points out above, each of Random House's divisions is keeping its own sub rights department. And while it's possible that certain operations will at some point be centralized, the fact of the changes in sub rights don't make it any more likely than it was before.

Just after 10 a.m., a few minutes before Mr. Dohle’s e-mail went out, the president of Random House’s Knopf division, Sonny Mehta, asked his senior staff to gather for a brief meeting in his office on the 21st floor of the Random House building. About a dozen people piled in, including Mr. Mehta’s top editors and the heads of various other departments within the group.

Some sat on the couch while others crouched on the floor, as Mr. Mehta, from behind his desk, announced in his usual matter-of-fact manner that Mr. Dohle was preparing to unveil a major reorganization that would see two of the company’s other divisions—Bantam Dell and Doubleday—dismantled, and the other three—Mr. Mehta’s Knopf, Gina Centrello’s Random House Publishing Group and Jenny Frost’s Crown—made even bigger than they are. Knopf, Mr. Mehta told his team, would be absorbing Doubleday’s flagship hardcover operation as well as its subsidiary imprints (Nan A. Talese Books and Flying Dolphin).

By the time the meeting ended, it was clear to most everyone in the room, especially after they found out what was happening elsewhere in the company, that Knopf had not only survived the long-dreaded reorganization but that it stood to get more out of it than any other division.

How much Mr. Mehta had to negotiate for his lot is unclear—unfortunately, little is known about the discussions he had with Mr. Dohle and the other division heads prior to Wednesday morning’s announcement. While it’s generally believed that Mr. Dohle crafted the realignment unilaterally, several sources said the three division heads did gather for a meeting with him over the previous weekend in the Random House building.

WHATEVER ROLE Mr. Mehta had in getting what he got, the spoils reaped—from the unspeakably lucrative John Grisham franchise to the next blockbuster by Da Vinci Code author Dan Brown—were evident immediately. And though there are some who think Ms. Centrello got the best deal simply by virtue of the fact that she survived in spite of her vulnerable track record as head of Little Random, the belief that Knopf emerged from the restructuring much stronger than it was before has proven uncontroversial in the week since Mr. Dohle’s announcement.

Mr. Grisham and Mr. Brown alone, according to several top agents, would have given Mr. Mehta a massive advantage over the rest of Random House, but the fact is, he’s also inherited an all-star editorial team led by the gifted Phyllis Grann, who seems to turn every book she touches into a best seller and is regarded by colleagues with a level of respect usually reserved for former U.S. presidents. Other heavyweights Mr. Mehta will welcome to his ranks as a result of the reorganization are Gerry Howard, a beloved literary editor who acquired David Foster Wallace’s first novel and whose list now includes Chuck Palahniuk; Alison Callahan, who edits Ann Patchett and Carolyn Parkhurst and specializes in commercial women’s fiction; and Ms. Talese, who publishes a small but distinguished list that includes Ian McEwan and Alex Kotlowitz.

Even those who felt it was too early to judge the winners and losers of last Wednesday’s upheaval had to stop and acknowledge Mr. Mehta’s dominance when news came that afternoon that Knopf was responsible for publishing fully 8 of the 10 books named to The New York Times Book Review’s forthcoming best-of-2008 list. That stunning showing was almost embarrassing in light of what had happened that morning, and congratulations were necessarily accompanied by and received with some discomfort. 

Mr. Dohle talked about the achievement on Thursday morning, when he met with the 200 or so people who make up the staff of Knopf to explain and take questions on the imminent changes. The “town-hall” meeting, as it was referred to in-house, took place in a large room next to the cafeteria on the second floor; normally, when it’s not being used for such purposes, people eat lunch in there.

According to several people who were in the room, Mr. Dohle, who delivered different iterations of the presentation to each of Random House’s five divisions last week, came to the meeting dressed in a suit, not the button-down collared shirt and Chinos that staffers usually see him wearing when they cross paths with him in the building. Mr. Mehta sat up front, and Mr. Dohle nodded toward him occasionally as he assured his audience that despite appearances, he intends to grow Random House, not shrink it, and described in broad terms his conviction that because book publishing is not a growing market, Random House needs to seize a larger share of it and increase revenue. The most important thing now was “teamwork,” he kept saying, punctuating many of his sentences by emphatically patting his rib cage with his hands.

Once he was done, the 40-year-old CEO opened the floor up to questions.

One person who was called on to speak pointed out that while having eight books on the Book Review’s year-end list is very nice, such books were not bringing Random House Inc. big profits or spending weeks on the best-seller list—that for all of Mr. Dohle’s congratulations, the books that had been recognized by the Times aren’t the ones that will help achieve the goals or solve the problems he identified in his opening remarks. Mr. Dohle responded vaguely, just as he did for all the questions that were asked of him.

Only a few others bothered raising their hands before it became apparent that Mr. Dohle was not going to tell them anything of substance, and the meeting was adjourned.

An editorial meeting was held in Mr. Mehta’s office shortly thereafter. Such meetings, during which editors discuss acquisitions with each other and with the heads of publicity, sales, marketing and rights, happen at Knopf once every month or so, and Thursday’s had been planned well before the timing of the reorganization was finalized. Consequently, it proceeded exactly the same way as it always does, except that at the end Mr. Mehta and Tony Chirico, the shrewd and disciplined president of the Knopf group, took questions from the staff.

Mr. Mehta, who is famously elusive and hard to get access to, was asked at one point how he plans to manage his time, now that he has so many more editors under his jurisdiction.

Though the question had not been directed at him, Mr. Chirico dove for it with the zeal of someone trying to set the record straight, and said as convincingly as he could that the number of Doubleday people coming over to Knopf was actually not that big, and that the change would be felt far less acutely than some seemed to expect.

Mr. Mehta amplified this sentiment and moved on, assuring those in the room that he and Mr. Chirico would work quickly to figure out what kind of budget cuts they will have to enact as a result of the restructuring.     

While they and their counterparts at Crown and Little Random sort through that, 1745 Broadway remains, as one agent put it, in a state of “complete emotional lockdown,” as everyone except the people in the thriving children’s division wonders if they will still have a job in 2009. 

Tomorrow, the Knopf Publishing Group will hold its annual office Christmas party. The new people are invited. No word on whether they’ll be joined by Mr. Dohle.

lneyfakh@observer.com

The first slide features a picture of P.D. James' The Private Patient below the large-type slogan "BOOKS MAKE GREAT GIFTS!" and a pricetag at the top which informs readers that this is "an important message from Knopf." The second slide has a bunch more pricetags, each of which provides a reason why a book makes a good gift. From the top: "A book can change someone's life," "It can make someone laugh," "It's thoughtful and affordable," "You can never have too many!"

The third slide, which is what stays on the page once the first two have cycled through, boasts in big letters (and an exclamation point) of the fact that eight of the 10 books the editors of The New York Times Book Review chose for their year-end list "ARE KNOPF BOOKS!" At the top, another pricetag, this one emblazoned with the declaration, "We make shopping easy."

Oh, is that what Knopf does these days! One wonders what happened to that elegant dog they used to have.

According to Knopf's creative marketing director Anne-Lise Spitzer, who has been with the house for 23 years, the nytimes.com "gift" ad was deliberately made to look a little snazzier and populist than what advertising director Stephanie Kloss and designer Amy Citron usually do.

"I liked the tags and all," Ms. Spitzer said. "It's definitely more commercial than we normally go for, but we have some books that really are commercial and really do make good gifts, so why not get that message out? We were trying to make an ad also that would draw, attention and not to be too quiet on the busy New York Times page."

She added that the advertising team tends to do more "generic" ads during the holiday season.

One disappointing thing about the campaign, Ms. Spitzer said, is that the Web site the ad was supposed to link to—an interactive gift guide hosted on the Random House site—went down for about an hour this afternoon.

"It's not their problem, it's a problem on our end," an exasperated Ms. Spitzer said shortly after the problem was corrected. "We tried to get them to pause it while it was cleared up but apparently that didn't happen."

Mr. Dohle delighted in the fact that fully nine of the ten books on the NYTBR list had been published by Random House. Those nine, for the record: Dangerous Laughter by Steven Millhauser; A Mercy by Toni Morrison; Unaccustomed Earth by Jhumpa Lahiri; The Forever War by Dexter Filkins; Nothing to Be Frightened Of by Julian Barnes; The Republic of Suffering by Drew Gilpin Faust; The World Is What It Is by Patrick French; Netherland by Joseph O'Neill; and The Dark Side by Jane Mayer.

Under Random House's old structure, eight of those nine would count as Knopf books, but after yesterday's reorganization, which stripped Jane Mayer's publisher, Doubleday, of its divisional status and placed it under the jurisdiction of Sonny Mehta, it is all nine. Mr. Dohle did not draw attention to this fact, presumably in the interest of fostering in-house harmony.

"In these times, it is especially important to remember how highly the literary and cultural community worldwide regards Random House's imprints and books," Mr. Dohle wrote. "What a powerful testimonial to the brilliance of our authors and the creativity of our imprint editors and publishers these year-end accolades are. Congratulations to all of you and to our authors!"

Mr. Applebaum said in a phone interview that to characterize Mr. Dohle's note as an attempt to cheer up Random House's staff "would be glib."

Below, the full memo, which also notes that Random House racked up 31 of the New York Times' 100 "Notable Books of the Year":

 MARKUS DOHLE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MEMBER OF THE EXECUTIVE BOARD OF BERTELSMANN AG

December 4, 2008

TO EVERYONE AT RANDOM HOUSE NORTH AMERICA

In these times, it is especially important to remember how highly the literary and cultural community worldwide regards Random House’s imprints and books. But even by the high standards the critics set for our works, the recognition our 2008 titles have just received from North America’s two most influential and widely read newspaper book-review sections is truly something for Random House to cheer about.

New York Times Book Review

Nine of the “Ten Best Books of the Year” selected by the editors of the New York Times Book Review are ours! They are:

DANGEROUS LAUGHTER by Steven Millhauser (Knopf)
A MERCY by Toni Morrison (Knopf)
UNACCUSTOMED EARTH by Jhumpa Lahiri (Knopf)
THE FOREVER WAR by Dexter Filkins (Knopf)
NOTHING TO BE FRIGHTENED OF by Julian Barnes (Knopf)
THIS REPUBLIC OF SUFFERING by Drew Gilpin Faust (Knopf)
THE WORLD IS WHAT IT IS by Patrick French (Knopf)
NETHERLAND by Joseph O'Neill (Pantheon)
THE DARK SIDE by Jane Mayer (Doubleday)

This is the first time in anyone’s memory here one single publishing company has so many of its titles appear as the “Best” in the same year.  The complete list now is available online at the New York Times Website and will be printed in the Sunday, December 14 edition of The Book Review.

The Sunday, December 7 issue of The Book Review presents its annual “100 Notable Books of 2008,” and thirty-one of them are Random House, Inc. titles—nearly twice the number of the nearest competing publishing group. They range from AMERICAN WIFE by Curtis Sittenfeld (Random House) and THE GOOD THIEF by Hannah Tinti (Dial Press) to FACTORY GIRLS: From Village to City in a Changing China by Leslie T. Chang (Spiegel & Grau) and AMERICAN LION: Andrew Jackson in the White House by Jon Meacham (Random House).  The entire list can be viewed by clicking:  www.nytimes.com/2008/12/07/books/review/100Notable-t.html

Last month in The Book Review, PALE MALE: Citizen Hawk of New York City by Janet Schulman and Illustrated by Meilo So was cited as one of the ten “New York Times Best Illustrated Children’s Books of 2008.”

Toronto Globe and Mail

Canada’s largest national daily annually selects the “Globe 100,” their book-review editors’ choices for the year’s best.  For the 2008 list published last weekend, Random House of Canada is the publisher of twenty-two of them, leading their industry.  Ten of the thirty-eight fiction titles, including THE CELLIST OF SARAJEVO by Steven Galloway (Knopf Canada) and THE GREAT KAROO by Fred Stenson (Doubleday Canada), and twelve of the fifty-nine nonfiction, among them, WHAT IS AMERICA? by Ronald Wright (Knopf Canada) and A PLACE WITHIN by M.G. Vassanji (Doubleday Canada) are our honorees.  The list of our titles can be viewed by clicking:  http://www.randomhouse.ca/news/top100.html

These critical accolades are more than just words of praise. Our sales and marketing colleagues are working with our accounts across North America to enable our booksellers to enjoy the greatest of sales advantages from these selections, both immediately during this holiday season, and most importantly as future backlist. The Times also will be promoting their “Ten Best” list in national media interviews and via their forthcoming specially-created microsite.

What a powerful testimonial to the brilliance of our authors and the creativity of our imprint editors and publishers these year-end accolades are.  Congratulations to all of you and to our authors!

It's true that trouble started coming down in a drizzle some time ago, when Mr. Dohle imported a young fellow from Bertelsmann's headquarters in Germany and installed him as the new head of Random House's human resources. And it's true the clouds got a little darker in October when 16 jobs were eliminated at Doubleday and Mr. Dohle announced that pensions for existing employees would be frozen and no longer offered to newcomers.

These were not signs of prosperity, to be sure, but they were not the radical measures Mr. Dohle was expected to enact either. The man appeared to be tinkering--making the company squirm when it should have by any reasonable expectation been convulsing.

Yesterday, Mr. Dohle finally kicked things off properly, seizing Random House by the throat and imposing upon it a reorganization that decisively addressed the costly inefficiencies he inherited from his predecessor, the puzzling former CEO Peter Olson. When Mr. Dohle was through, two of Random House's five adult trade divisions had been busted up and integrated into Crown, Knopf, and the flagship Little Random division, those areas of the company that had apparently been deemed during Mr. Dohle's extended evaluation functional enough to survive.

The divisions that were shut down, Bantam Dell and Doubleday, together add up to the entity once known colloquially as "BDD," which represented the full extent of Bertelsmann AG's presence in American trade publishing prior to their 1998 acquisition of Random House Inc. from the Newhouse family. That merger yielded a company controlled in large part by a tight-knit squad of men who had come up through BDD--namely Peter Olson, the former banker who had been with Bertelsmann since 1990; Stuart Applebaum, the silky but surly corporate spokesman said to be one of Mr. Olson's closest advisers; Steve Rubin, the one-time magazine writer who joined Bantam in 1984 and was made publisher of Doubleday six years later; and Irwyn Applebaum, brother of Stuart and the longtime head of Bantam Dell.

Together, Mr. Olson, Mr. Rubin, and the Applebaum Brothers ran Random House in a fashion that was described and eventually mythologized in widely read pieces of journalism like Lynn Herschberg's "Nothing Random" in The New York Times Magazine and Joe Hagan's "Those Royal Applebaums" in this paper. The group's ascendance went unchallenged until the deposition of Mr. Olson last spring, and did not end properly until yesterday morning, at which point Doubleday was cut up into scraps and fed to Sonny Mehta's Knopf and Jenny Frost's Crown, and Bantam Dell was effectively shuttered and folded into Gina Centrello's Little Random.

Following the restructuring, the only member of the BDD old guard left is Stuart Applebaum, the corporate spokesman said to have enjoyed such great influence at Random House during the reign of Peter Olson. It's unclear whether Mr. Applebaum and Mr. Dohle ever developed as close a bond, but the man's fate is considered by the publishing community to be so uncertain that his continued employment at the company was a point of interest for industry insiders in the aftermath of yesterday's earthquake.

IF YESTERDAY'S RESTRUCTURING made Random House a less cozy place for Mr. Applebaum, it definitely became a more cozy one for Ms. Centrello, the president and publisher of the Little Random group, whose position at the company was not only preserved amid the upheaval but made even more powerful as she was given control of both Bantam Dell and Spiegel & Grau.

The fact that Ms. Centrello is as much a BDD-er as anyone--it was her longtime mentor Irwyn Applebaum who groomed her for the job atop Little Random--coupled with the fact that Little Random under her leadership has largely failed to articulate a clear sensibility or mount major successes with any reliability made some high-level publishing people say yesterday that she was lucky to survive Mr. Dohle's broom.

"No one is surprised that [Crown president Jenny Frost] got more powerful. No one is surprised that [Knopf president Sonny Mehta] got more powerful," said one top agent yesterday. "But why did Gina survive and Steve fall? What did Little Random do to deserve survival? What did Gina do right that Steve did wrong?"

The agent wondered whether Markus Dohle would himself be able to articulate an answer if pressed to explain why the Doubleday division was worth giving up on. Was it that Da Vinci Code author Dan Brown had failed to come up with a second blockbuster? Was it that Andrew Davidson's The Gargoyle, which Mr. Rubin spent more than a million dollars on, fell so quickly from the New York Times best-seller list?

"Why, when you look at how Doubleday was doing and Little Random was doing, did you say Doubleday needs to go away?" the agent asked. "Why was Gina rewarded and Steve punished? Why was that? Was it that Steve had a bad year? Was it more than a few bad bets? Was there not a great problem at Little Random?"

There are a few possible reasons why Ms. Centrello gets to stand with the living today. One theory is that Mr. Dohle favored her because he knew she had already once overseen a consolidation (the integration of Little Random and Ballantine in 2003). Another says Ms. Centrello had an advantage over Mr. Rubin because she's more than 25 years younger than him. A third says she benefited from Little Random's status as the company's flagship imprint, which might have made Mr. Dohle reluctant to fold it into another division rather than the other way around.

It remains to be seen whether yesterday's reorganization signals a new beginning for Ms. Centrello's team of editors at Little Random--specifically, whether the fact that the division's future is now more or less guaranteed will mean they'll settle organically on some collective sensibility so that literary agents have a better idea of what is and isn't worth sending them.

What that collective sensibility might look like is at this point anyone's guess. So far, Ms. Centrello and her number twos--associate publisher Kate Medina and her editorial director, Jennifer Hershey--have signaled an interest in literary prestige, and a deeply held desire to appear in the eyes of agents no less attractive a destination for serious nonfiction and literature than the smug snobs at Knopf. If it's a complex for Ms. Centrello, it's one that probably stems from the fiasco that was the firing of Ann Godoff--the event that of course led to Ms. Centrello's appointment atop Little Random, and what cast her forever as the commercially minded suit whose ascent represented a blow to high culture.

Could the fact that Ms. Centrello got Spiegel & Grau and the Dial Press imprint of Bantam Dell--both very literary-minded outfits, though Spiegel & Grau's two biggest books so far were written by Suze Orman and comedian Artie Lange--mean that Little Random is that much closer now to standing shoulder to shoulder with Knopf?

Make no mistake: as indicated by The New York Times' list of top 10 notable books of 2008--which included fully eight titles from Knopf and none from Little Random--"closer" here still means "really far."

Anyway, according to a top agent, whatever the reorganization did for Little Random's literary profile, it gave Knopf the flagship imprint of Doubleday and Nan A. Talese, both of which are strong literary properties that cut into whatever gain Little Random might have made with Spiegel & Grau and Dial.

"In terms of who gained in terms of literary authority, or clout, or prestige," the agent said, "Knopf got stronger from this than Little Random did, but Little Random got a bit stronger, too, so the distance between Knopf and Little Random is probably increased by this but not by as much as it could have been."

It could have been worse for Little Random, as one highly placed publishing observer said: Spiegel & Grau could have--as might have been expected--ended up at Knopf.

The reason they didn't probably has to do with Sonny Mehta having his hands full. Knopf's editorial department was already stacked with marquee names who are accustomed to buying big books and receiving top-notch support from marketing and sales; Mr. Mehta's welcoming of Nan Talese, as well as Doubleday's Phyllis Grann, Gerry Howard and Allison Callahan, will leave him stretched thin enough without Cindy Spiegel and Julie Grau in the mix.

"Power at Knopf comes from having access to Sonny," said the agent quoted above. "And he's already hard to get access to."

This of course puts Ms. Talese and the Doubleday editors at a potential disadvantage as they try to make their way at Knopf--a fact that supports the point of view that Doubleday lost more than anyone else in yesterday's reorganization. In addition to facing potential competition from longtime Knopf hands, the staff there is also suffering a painful separation from their sister imprint Broadway, which means a lot of their colleagues--Charlie Conrad, Stacy Creamer, David Drake, Michael Palgon, and Kris Puopolo--are all at Crown now.

The motivation for separating Broadway from Doubleday has to do with Broadway's bent towards practical, commercial nonfiction titles, which are more at home at Crown than they would have been at Knopf (Sonny Mehta, when all is said and done, does not really do self-help). The fact is, though, many of the books published under the Broadway name were precisely the sort of high quality narrative nonfiction that secured the Doubleday imprint a place at Knopf. Would it not have made more sense, some publishing observers wonder, to have given up the pretense that Broadway and Doubleday were wholly distinct entities, instead of busting up their alliance along lines that have been mainly nominal for years?

Asked yesterday how it was decided which imprint went where, Random House spokeswoman Carol Schneider said the "alignments are not 100 percent black and white but certain affinities have been brought together."

Which is mainly true--an informal survey of agents and publishers at rival houses suggests that most of the people watching Random right now, though horrified by the inevitably serious layoffs that will result from yesterday's reshuffling, believe that Mr. Dohle did not spend his six months of silence staring at the ceiling.

This was yesterday, though, when these people were discussing it, and one could be forgiven then for feeling too stunned to evaluate in great detail the logic of Mr. Dohle's plan. A few hours after it was announced, after all, the publishing community was rocked by a series of news breaks that taken together gave the impression of an industry under siege. First word came that Simon & Schuster was cutting 35 jobs--including those of Little Simon editor Denise Roy and Scribner's Colin Robinson. Then Ann Patty at the collapsing trade division of Houghton Mifflin Harcourt told GalleyCat she'd been fired along with "a lot" of colleagues, which we now know includes award-winning veteran editor Drenka Willen and Anjali Singh.

If only it could be said that the worst were over. Instead, HarperCollins spokeswoman Erin Crum is telling Bloomberg that her company "hasn't decided whether to eliminate jobs" yet, and Houghton Mifflin Harcourt's treacherous parent company is apparently struggling to find a buyer for the trade division who is willing to accept the massive amount of debt that comes attached to the once-proud property like a ball and chain.

At Random House, most expect that there's only more pain ahead. Cuts there have not even begun, and rumors in the building, though probably founded merely on someone's back-of-the-napkin calculation, predict that reorganization-related layoffs will number in the three figures. Ms. Schneider, the Random House spokeswoman, said who stays and who goes at this point depends on the division heads.

"If the layoffs are necessary, those decisions are going to be made as objectively as possible and as quickly as possible, but I would venture to guess not in the next week or so," Ms. Schneider said. "This is a big reorganization."