Of the two, Lagardère provided more detail on digital results:

• Digital made up 11.3 percent of Lagardère Publishing’s net sales worldwide, compared to 8.4 percent a year ago.
• Ebooks now account for 34 percent of adult trade book sales in the U.S., compared to 27 percent last year, and 31 percent in the U.K., up from 22 percent last year.
• In France, digital sales are much smaller, though growing: Ebooks accounted for 3.2 percent of adult trade book sales there, up from 1 percent last year.

There’s less digital stuff from Bertelsmann. The company just noted that at Random House Germany, digital now accounts for 10 percent of revenues. Worldwide the figure is around 20 percent, company spokesman Stuart Applebaum told me.

Also of note at Bertelsmann: This was its last Penguin-less financial report, as Penguin and Random House have now merged to form the world’s largest book publisher. Penguin Random House CEO Markus Dohle wrote in a letter to employees:

“In our first weeks as a united company we’ve already enjoyed great attention for several of our early successes. In the U.S. we have had sleeper hits with the #1 bestselling ZEALOT by Reza Aslan and THIS TOWN by Mark Leibovich. John Williams’s STONER and I AM PILGRIM by Terry Hayes achieved sales breakthroughs in the UK, where Sylvia Day’s ENTWINED WITH YOU topped The Bookseller’s first-ever official eBook sales ranking. THE AUSTRALIAN MOMENT by George Megalogenis and John van de Ruit’s SPUD series were honored with major literary prizes in Australia and South Africa respectively. Substantial media coverage is boosting sales in New Zealand for books by Michael Van de Elzen and Lynley Dodd. Random House India published its first enhanced eBook, and Penguin India’s AN UNCERTAIN GLORY by Jean Drèze and Amartya Sen has created a national debate.”

Photo courtesy of Shutterstock / Thomas Bethge

The merger follows approval by the U.S., Canada, the EU, Australia, New Zealand and China.

Random House CEO Markus Dohle will serve as CEO of Penguin Random House; Bertelsmann owns 53 percent of the combined company, and Penguin owns 47 percent. Combined, the companies publish over 15,000 books annually and have 10,000 employees, with revenues of $3.9 billion.

One of the combined company’s goals is to advance in the digital and emerging ebook markets. “Together, we can and will invest on a much larger scale than separately in diverse content, author development and support, the publishing talent, the entire spectrum of physical and digital book acquisitions, production, marketing, and distribution, and also in fast-growing markets of the future,” Bertelsmann CEO Thomas Rabe said in a statement. “We are accelerating the transformation to digital and leveraging the entire range of possibilities it offers. We also are promoting regional growth, especially in the emerging markets of China, India, and Brazil.”

The press release notes the far-reaching footprint that Penguin Random House will have: “Penguin Random House will combine the adult and children’s fiction  and nonfiction print and digital trade book publishing businesses of Penguin and Random House in the U.S., U.K., Canada, Australia, New Zealand, and India; Penguin’s trade publishing activity in Asia and South Africa; Dorling Kindersley worldwide; and Random House’s companies in Spain, Mexico, Argentina, Uruguay, Colombia, and  Chile.” (Random House’s German-language publishing group Verlagsgruppe Random House is not included and remains part of Bertelsmann, reporting to Dohle.)

Among the leadership changes:

• Coram Williams, who was CFO for Penguin, will now serve as CFO for Penguin Random House (PRH) and will oversee Author Solutions, the self-publishing business that Penguin acquired last year.
• David Shanks is stepping down as CEO of Penguin and will serve as senior executive advisor to Dohle.
• Madeline McIntosh, who was COO of Random House, becomes president and COO of PRH in the U.S.
• Brad Martin, who was president and CEO of Random House Canada, becomes CEO of PRH Canada.
• Tom Weldon, who was CEO of Penguin U.K., becomes CEO of PRH U.K.

<em>Photo courtesy of <a href=”http://www.shutterstock.com/pic.mhtml?id=107625431″>Shutterstock / Thomas Bethge</a> </em>

“We have closed our investigation and took no action,” a DOJ spokeswoman confirmed.

The merger, which remains under review by other antitrust authorities including the European Commission and the Canadian Competition Bureau, would create the world’s largest publisher. According to the announcement sent by Pearson, “Pearson and Bertelsmann continue to expect the transaction to close in the second half of 2013, after all necessary approvals have been received.”

Pearson’s full announcement:

Pearson and Bertelsmann today announce that they have been notified by the U.S. Department of Justice that it has closed its investigation into the proposed merger of Penguin and Random House, without conditions.

The two companies announced their agreement to combine Penguin and Random House in October 2012. The proposed merger is currently under review by the European Commission, the Canadian Competition Bureau and various other antitrust authorities around the world. Pearson and Bertelsmann continue to expect the transaction to close in the second half of 2013, after all necessary approvals have been received.

Following completion, Bertelsmann will own 53% and Pearson 47% of Penguin Random House. It will encompass all of Random House and Penguin Group’s publishing units in the U.S., Canada, the U.K., Australia, New Zealand, India and South Africa, as well as Penguin’s operations in China and Random House’s publishers in Spain and Latin America. Pearson and Bertelsmann believe that the combined organisation, the world’s leading consumer publishing company, will have a stronger platform and greater resources to invest in rich content, new digital publishing models and high-growth emerging markets.

Fremantle produces and distributes TV shows internationally and is part of the RTL Group, Europe’s largest TV and radio broadcast company. It will have a first-look deal on Random House properties. Random House Television will be part of Random House Studio, the entertainment division formerly known as Random House Films.

According to the release, “Random House Television will work together with Random House’s editors and publishers, and their authors’ agents, to identify and acquire performance rights for the full range of broadcast network, cable, and premium television scripted formats.”

Jeffrey Levine, formerly of Spring Creek Productions, has been hired as head of TV and will report to Random House Studio president Peter Gethers. Levine will work out of Fremantle’s Los Angeles office.

Release:

FREMANTLEMEDIA & RANDOM HOUSE FORM EXCLUSIVE TELEVISION PARTNERSHIP 

Newly Established Random House Television To Be Headed By Jeffrey Levine

July 25, 2012 – FremantleMedia, the producer and distributor of several of the world’s most widely-watched television series, and Random House, Inc., the U.S. division of Random House, the world’s largest trade-book publisher, both companies of Bertelsmann AG, announced today a major new creative and strategic partnership to develop scripted television programming for the U.S. and international markets based on the fiction and nonfiction books published by Random House’s imprints in North America and internationally.

The first-look deal with FremantleMedia will reside within Random House Television, a newly created part of Random House Studio, the publisher’s rebranded and expanded entertainment division led by Peter Gethers, President. Random House Television will work together with Random House’s editors and publishers, and their authors’ agents, to identify and acquire performance rights for the full range of broadcast network, cable, and premium television scripted formats.

The partnership will also seek to collaborate with Random House authors to develop original scripted television properties they might create.

United Talent Agency represented Random House Studio and negotiated the first-look deal with FremantleMedia.

Jeffrey Levine has been appointed Head of Television for Random House Television, based in FremantleMedia’s Los Angeles offices, reporting to Mr. Gethers. He will work closely with Jeff Tahler, FremantleMedia Enterprises Senior Vice President of Global Content, and Tony Optican, Senior Vice President of Scripted Programming for FremantleMedia North America, and with the entire Random House Studio team.

Mr. Levine joins the company from Spring Creek Productions, where he worked on the development of many of the company’s features including “Blood Diamond,” “Monster-In-Law” and the now casting “This Is Where I Leave You.”  Levine was an Executive Producer on HBO’s “Too Big To Fail,” which garnered 11 Emmy® nominations and won the WGA award for best adaption for Long Form. Previously Mr. Levine was Vice President, Movies and Mini-Series at Turner Broadcasting Company, where he oversaw the development of such projects as “James Dean” (Golden Globe®,  Emmy®, ACE, and BFC winner), and “Mists of Avalon” (9 Emmy® nominations, WGA nominee).

Also joining the Random House Television team in Los Angeles is Christina Malach, Executive Story Editor, Random House Studio. The New York team under Mr. Gethers is Valerie Cates and Claudia Herr, both Executive Story editors, and Brady Emerson, Story Editor, Random House Studio.

In announcing the partnership, David Ellender, Global CEO of FremantleMedia Enterprises, said “This is a hugely exciting coming together of two companies in the Bertelsmann family. As one of the world’s most successful book publishers with a global roster of admired authors, Random House is the perfect partner for FremantleMedia as we continue to develop and expand our slate of world-class scripted content for international audiences. We warmly welcome Peter, Jeff and the entire Random House Television team, and look forward to working with them to develop high-quality television projects with wide appeal.”

Peter Gethers said, “Partnering with the very talented and savvy FremantleMedia team gives us a wonderful opportunity to significantly increase the many options we already offer to Random House authors around the world. This alliance will enable us to help them expand into new creative and commercial areas to broaden their audience. Random House Television is a natural extension of the partnership we already enjoy with our writers and will help them flourish in an increasingly complex, exciting, and interdependent global entertainment business. I’m thrilled to have Jeff on board with us, and with the opportunity to work with FremantleMedia in the U.S. and internationally.”

Image courtesy of Shutterstock / alexmillos

In the 2011 Bertelsmann annual report released this week, Random House said it has nearly 40,000 titles available as e-books worldwide, and while revenues were down for the year, “operating EBIT was higher year on year, especially in the United States. This rise was helped by continued cost-cutting measures and lower return rates in North America and the United Kingdom due to increased e-book sales.”

Similarly, Pearson’s 2011 annual report shows that Penguin’s sales are roughly flat, while adjusted operating profit rose by 5 percent, again due in part to e-book sales. “Penguin saw e-book revenues in 2011 double on the previous year,” the report says. “In 2011 they accounted for 12% of Penguin revenues worldwide and more than 20% in the US. Since 2008, digital downloads of apps and ebooks across Penguin have totalled approximately 50 million.”

And CBS’s most recent earnings report shows Simon & Schuster (NYSE: CBS) revenues down by 1 percent for full-year 2011, while “publishing adjusted OIBDA for 2011 rose 28% to $92 million from $72 million for the prior year, reflecting lower direct operating costs” due in part to “the decline in expenses resulting from an increase in more profitable digital sales as a percentage of total revenues.”

In other words, e-books are generally more profitable than print books for publishers. In 2012, I hope to see that reflected in higher e-book royalties for authors.

Our updated Publishers’ Digital Revenue chart is below.

BookStats, a new annual statistical survey from BISG and the Association of American Publishers, estimates that e-books made up 6.4 percent of the trade book market in 2010, with a greater percentage expected in 2011. We’re now seeing how much greater that percentage could be.

Overall, Random House saw “triple-digit percentage sales growth in e-books,” parent company Bertelsmann said, although it did not break out e-book revenues, units sold or other indicators of how well e-books are doing. Revenues for Random House internationally were €787 ($1137.22/£696.97) million, down from €791 ($1,143/£700.51) million in the first half of 2010. The company said that “digital revenue potential [was] strengthened through acquisition of digital media agency Smashing Ideas.” Bertelsmann acquired Smashing Ideas, a digital media agency, for Random House in May.

Random House now has 27,000 e-books available worldwide, the company said.

In a letter to employees that accompanied Bertelsmann’s announcement, Random House Group UK CEO Gail Rebuck said that e-book sales now make up over 10 percent of RHUK revenue. And she said the company now has lifetime sales of three million e-books and has 7,000 titles available digitally.

Other publishing companies have also reported high percentages of digital sales (which really mean e-book sales at this point), though none as high as Random House’s. Digital sales made up 15 percent of Simon & Schuster’s revenues in its most recent earnings report (for the second quarter of 2011, ending June 30). HarperCollins reported that digital sales made up 12 percent of U.S. revenues for its full fiscal year. And in its half-year earnings report, Penguin parent company Pearson (NYSE: PSO) reported that 14 percent of Penguin’s worldwide sales are now digital.

Within its range of digital marketing, Smashing Ideas has an ePublishing group, which is headed by the co-creator and developer of the Alice for iPad, which is the Lewis Carroll story that comes complete with interactive illustrations.

Smashing Ideas and Random House’s collaboration has been focused around developing a series of apps aimed at kids. Before the partnership was struck, Random House already had set up a small unit to create books tied to new and existing video game titles in an attempt to to broaden its book publishing and digital offerings. The first two apps from their partnership, Wild About Books and Pat the Bunny, both hit number one in the books category in the Apple (NSDQ: AAPL) App store.

Terms of the deal were not disclosed.

Smashing Ideas, which opened its doors in 1996 and never took on any venture capital, will continue to operate independently out of its Seattle headquarters. In addition to building on its work with Random House from within, it will continue to work with outside clients.

“The beauty of our relationship with Random House is that we will stay an independent company. The entire management team is staying on with no changes to our existing roles…mine included.,” Smashing Ideas CEO Steve Jackson told paidContent in an e-mail. Release

The venture, which holds of European back catalogs of more than 200 artists from Sony BMG days, will receive about