Pensions Frozen at Random House Inc.
By Hillel Italie, Associated Press
November 20, 2008
The country's largest trade publisher, Random House Inc., has frozen the pensions of its current employees and eliminated them for future hires, the latest cuts in an industry hit by declining sales and anticipating, at best, a difficult 2009.
"Effective Dec. 31, benefits in the Random House, Inc. Pension Plan will no longer grow -- but they will not be reduced," spokesman Stuart Applebaum said in a statement released Thursday in response to a query from The Associated Press.
Applebaum added that, effective Jan. 1, no new employees "will be enrolled in the Random House, Inc. Pension Plan." The company will continue to offer matching funds, up to 6 percent, for 401k plans.
"Random House has always been a cost-conscious company, and particularly so in these financially troubled times," he said when asked if future cuts were possible.
Applebaum said talk of cutting pension had been going on for years, although changes at Random House have been expected since Markus Dohle replaced Peter Olson in May as chairman of the publisher's worldwide operations. "Mr. Dohle's planning and discussions about the company's future has been and continue to be very interactive at all levels of the company worldwide," Applebaum said.
Random House is owned by Germany media company Bertelsmann AG.
A Random House division, the Doubleday Publishing Group, announced last month that it had laid off 16 people. "South Beach Diet" publisher Rodale Inc. recently laid off 14 from its book division.
Earlier Thursday, Barnes & Noble Inc. reported a larger-than-expected quarterly loss. The superstore chain reduced its full-year sales and earnings forecasts, sending its shares down sharply, and said it would cut the number of new stores opening in 2009.
Sales for B&N stores 15 months or older, a key indicator of a retailer's health, fell 7.4 percent from last year.
"A significant drop-off in customer traffic and consumer spending impacted our business in the third quarter," Chief Executive Steve Riggio said in a statement.
Two other leading publishers, Simon & Schuster and HarperCollins, have reported low earnings in recent weeks, citing an especially weak market for older, "backlist" books.
"What I think is happening is that you would have somebody who would go into a store and buy a front list title, and then ... buy a second book. And now they aren't buying that second book," says Simon & Schuster CEO Carolyn Reidy.
Carrie Kania, who heads the Harper Perennial paperback imprint at HarperCollins, says that while classics such as "To Kill a Mockingbird" remain popular, she has seen a drop for what she calls "the middle backlist, a book that came out 10 years ago that isn't in the news, that's a little off the radar.
"You might have an author with 10-12 books and it's harder now to get people to go for that fourth or fifth book," Kania said. "People are being more careful now. They aren't going as deep into an author's work."