Chief Of Random House Said To Be Stepping Down

FRANKFURT — Peter W. Olson, the chief executive of Random House and one of the most powerful figures in American book publishing, will step down in the next few weeks, according to two executives at Bertelsmann, the German media conglomerate that owns the division.

Peter W. Olson in 2005.

Hartmut Ostrowski, chief of Bertelsmann, the parent of Random House, is said to be impatient over the unit’s performance.

Mr. Olson, who has run Random House — the world’s largest consumer publisher, with an author list that includes John Grisham, Dan Brown, Norman Mailer and Toni Morrison — since 1998, has come under mounting pressure in recent months as Bertelsmann’s financial results have been damaged by lower profits at Random House and steep losses at its American book clubs.

Bertelsmann’s recently appointed chief executive, Hartmut Ostrowski, has lost patience with the performance of the American operations and wants to install his own person, said these executives, who spoke on condition of anonymity because it involved internal personnel issues.

The terms and exact timing of Mr. Olson’s departure were still under negotiation, these people said. Bertelsmann’s board is scheduled to meet in New York in two weeks; an announcement could come shortly after that. “It’s just a question of working out his deal,” one executive said.

It is not yet clear who will succeed Mr. Olson, although these executives said it would not necessarily be a prominent figure from New York publishing, and maybe not even an American.

Stuart Applebaum, a spokesman for Random House, said: “Mr. Olson is pursuing a normal business schedule today and for the foreseeable future.” On Monday afternoon, Mr. Olson hosted a reception for a group of Bertelsmann managers visiting from Germany.

Mr. Olson, 58, has worked for Bertelsmann for 20 years and was instrumental in helping to negotiate the company’s acquisition of Random House from Advance Publications a decade ago, when he was made chief executive of the group. He led the merger of Random House with Bantam Doubleday Dell, already owned by Bertelsmann, and in 2001 became the first American to join Bertelsmann’s executive board.

A tall, reserved former banker and lawyer who speaks fluent Russian and German, Mr. Olson is credited with giving publishers the autonomy to run their individual imprints, including Alfred A. Knopf, Doubleday and the Random House Publishing Group (known within the industry as “Little Random”).

A Random House executive with knowledge of Mr. Olson’s thinking said that Mr. Olson had been considering “a new career plan” for some time. This executive spoke on condition of anonymity because he did not want to appear to confirm the news of his departure.

Mr. Olson has long cut an unusual figure in the publishing industry, where he is known equally for his voracious reading habits and for his zealous attention to the bottom line. Recently, some people who work for him have questioned his overall vision for the company.

Five years ago, he tried to buy the book unit of AOL Time Warner, only to have Bertelsmann pull out of the deal. And Random House’s investment in the movie business, through a partnership with Focus Features, has so far produced one critical and commercial flop: “Reservation Road,” adapted from the novel by John Burnham Schwartz and released last year.

But Mr. Olson may be best remembered in the publishing industry for abruptly dismissing the president of the Random House Trade Group, Ann Godoff, in 2003. He said in a news release that she ran the only unit “to consistently fall short of their profitability targets.”

Now, Mr. Olson appears to have fallen victim to that same bottom-line calculus. Sales at Random House fell 5.6 percent in 2007, hurt by the eroding dollar and weak consumer spending. Operating profit declined 4.9 percent, though Random House maintained its impressive run of best sellers, among them “Playing for Pizza” by John Grisham; “On Chesil Beach” by Ian McEwan; “Giving” by Bill Clinton; and “Women & Money” by Suze Orman.

Mr. Ostrowski, 50, rose to the top of Bertelsmann as the head of its printing and services division, Arvato, and since taking the helm in January, he has placed emphasis on its nuts-and-bolts businesses.

When Mr. Ostrowski laid out his strategy for Bertelsmann shortly before taking office, Mr. Olson, who was ill with double pneumonia at the time, was missing from a lineup of executives on the stage in Berlin. Mr. Olson was out of the office for two months last fall because of his illness. Although he has returned, some publishers within the company say he has remained detached.

Mort Janklow, a high-profile Manhattan literary agent whose firm represents clients published by Random House imprints including Anne Rice and Danielle Steel, said he assumed Bertelsmann wanted to clean house. “The publishing business has been having some rough times and people come into these situations and like to have their own people in these jobs,” Mr. Janklow said. “Clearly the earnings and sales at Random House are off and it’s easy to say, ‘Well, what we need is a new C.E.O.’ ”

Since September, Mr. Olson has overseen the company’s American book clubs, which have suffered steep losses recently, although the effort to expand Bertelsmann’s presence in book clubs was led by Mr. Ostrowski’s predecessor, Gunter Thielen.

Last year, Bertelsmann bought the 50 percent of Bookspan, the operator of clubs including the Book-of-the-Month Club, that it did not already own from Time Warner.

Bertelsmann wrote down 291 million euros ($451 million) on its investment in the clubs last year, helping to push down its overall companywide net income more than 80 percent, to 405 million euros ($627 million), from 2.5 billion euros.

Bertelsmann has put the clubs up for sale, retaining Morgan Stanley to advise on offers. Bertelsmann hopes to raise about 250 million euros ($387 million).

Mark Landler reported from Frankfurt and Motoko Rich from New York.

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