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Random House CEO Calls
Upturn in Market ‘Fragile’

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December 15-31, 2003 Edition

Random House continues to be

a reliable pillar

of profitability . . .

Random House CEO Calls

Upturn in Market ‘Fragile’

NEW YORK, NY/12/16/03— Random House CEO Peter W.Olson, in his year-end report to employees Tuesday, called 2003 “the most challenging year in the book business and predicted that any upturn in the book marketplace would be “fragile.” On the other hand, he said the company is positioned to rival last year’s record performances in sales and bestsellers.

Olson praised Random House employees, faced with heavy industry-wide returns from fall 2002, the war in Iraq and the SARS outbreak, for never giving up efforts to attain overall targets. The CEO also said Random House North America,” continues to be a reliable pillar of profitability” for parent Bertelsmann AG.

In 2003 Random House, Inc. placed more adult and children’s hardcover and paperback titles on the various New York Times bestseller lists than any of its publishing group competitors. Of 175 titles, one-seventh of them, twenty-five titles, were #1, an all-time company high.

Random House North America led all publishing groups

in the total number

of recently published hardcovers . . .

The most celebrated #1 bestseller this year has been THE DA VINCI CODE by Dan Brown. Nine months after its Doubleday hardcover publication the title has 5.1 million copies in print.

Another title that helped Random House make its numbers this year is the audio publication of J. K. Rowling’s HARRY POTTER AND THE ORDER OF THE PHOENIX.

Along with Dan Brown, another spectacular example of Random House, Inc. author development in 2003 is the now-twenty-year-old Christopher Paolini, whose ERAGON was published this fall by the Knopf imprint of Random House Children’s Books. The first volume in a trilogy, the novel has gone back to press sixteen times in four months, bringing the total in print from the initial 100,000 to 750,000 copies.

Olson pointed out that many established Random House authors also had a terrific year. Among them were Danielle Steel, who had seven New York Times bestsellers, and John Grisham, who had six. Laura Hillenbrand’s SEABISCUIT: An American Legend was one of the largest-selling nonfiction titles for a third straight year, topping the PW trade and mass market lists simultaneously this summer in its Ballantine editions and becoming a hardcover bestseller once again in its Special Illustrated Collector’s Edition from Random House.

Random House, Inc. titles also received a trove of major literary prizes. Among them, the Pulitzer Prize for Biography for MASTER OF THE SENATE: The Years of Lyndon Johnson by Robert A. Caro; three National Book Critics Circle Awards: Fiction, ATONEMENT by Ian McEwan; Biography, CHARLES DARWIN: The Power of Place, Vol. II by Janet Browne; and Criticism, TESTS OF TIME by William H. Gass; four National Book Award finalists; two Newbery Honor winners: HOOT by Carl Hiaasen and PICTURES OF HOLLIS WOODS by Patricia Reilly Giff; and the Giller Prize in Canada for THE IN-BETWEEN WORLD OF VIKRAM LALL by M. G. Vassanji. J. M. Coetzee, long published by Random House in the U.K., Canada, Australasia, and Spain, became Random House’s newest Nobel Prize for Literature laureate.

For the fifth consecutive year, Random House North America led all publishing groups in the total number of recently published hardcovers chosen by the editors of The New York Times Book Reviewas “Notable Books for 2003”: 115 titles, more than twice as many as the publisher’s nearest competitor. Three of the nine “Editors Choice” titles of the best books of 2003 are Random House titles: THE FORTRESS OF SOLITUDE by Jonathan Lethem; LIVING TO TELL THE TALE by Gabriel García Márquez; and SAMUEL PEPYS: The Unequalled Self by Claire Tomalin.

“Our stature this

year as the only truly

global trade book publisher was enhanced by the acquisition of the Heyne publishing house . . . “

Olson also pointed out a number of enhancements in customer service, information technology, and distribution.

“Our stature this year as the only truly global trade book publisher was enhanced by the acquisition of the Heyne publishing house by Verlagsgruppe Random House, expanding our market leadership in Germany, and by our becoming the first Western publisher to establish a major trade book presence in Japan, thanks largely to the dedication of our Random House Asia President Y. S. Chi,” Olson said. “Our Random House Kodansha joint venture published its first list of eight titles in Japanese last month. It is a tremendous source of pride that Random House is the only trade book publishing company in the world with significant local book publishing operations for four of the leading language groups: English, German, Spanish, and Japanese,” he pointed out.

Random House, Inc.’s financial and editorial success in 2003 is, as ever, the result of the books we publish and the quality of the people who publish them. It is incumbent on us to make your career at Random House as fulfilling as possible. In the immediate future, to better help you balance the often increasing demands of your professional and personal lives, especially in this time of great uncertainty and stress, I have asked Human Resources to develop a company-wide initiative that can significantly contribute to your quality of life.

The chief executive also announced the development of a company-wide sabbatical program for employees with significant service tenure at the company. At ten-year milestone anniversaries employees will be eligible to take a multiweek paid leave from our workplace to pursue any purpose they choose. Specific details about the Random House Sabbatical Program will be provided in a forthcoming memo from the Human Resources Department.

In looking at the year ahead, Olson said: “I am very optimistic about ’04 because our title program in hardcover and paperback looks promising, cost containment efforts are ongoing, and the unsteady book retail economy is showing some signs of rebounding.”