The End of an Era at Random House

Prior to yesterday morning, it appeared that maybe Markus Dohle had secretly climbed out through his bathroom window at some point during the past six months and gone home to Germany. The dapper but mildly off-putting 40-year-old had been appointed CEO of Random House Inc. back in May, and since then, as far as anyone could tell, he had done pretty much nothing. Most of the men and women of 1745 Broadway--from the editors at venerable Knopf to the sales force at Doubleday--had the distinct impression that whenever Mr. Dohle wasn't making stops on his interminable "listening tour," he was holed up in his office punching numbers wildly into a calculator, with a red pen tucked behind his ear and piles of blueprints piled high on his desk. It was understood, in other words, that change was coming, but Mr. Dohle was not giving anybody any indication as to what it was he was planning.

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. Next Page >