Early on, Olson concentrated on saving money and decided not to interfere with the creative side of the book business. ''I once offered my editorial opinion on a book to Irwyn Applebaum,'' Olson said. ''He said, 'Frankly, Peter, I could not give a damn what your opinion of the book is.' Since then, I have offered no advice, unless they want permission to buy a very expensive book over a certain price. Then they have to ask. But the publishers decide which book to buy, how to market it, how much money to spend on the title, how to package it and present it. Often, I won't even have read it. I read the book only when it piques my interest. I cannot do their jobs better than they can.'' He paused. ''If they meet their financial obligation to the company, they will have autonomy. Otherwise. . . .'' His voice trailed off. ''That is our arrangement. I will not get involved unless it's necessary for the company.''

Olson meets with his publishers at least once a week for an informal discussion about books or management issues. He has frequent lunches, often centered on personal matters rather than work issues and very brisk. Olson has been known to ask for the check as soon as he finishes placing his lunch order. ''Peter likes to leave business to us,'' Mehta said. ''He never interferes.''

In 1998, Bertelsmann acquired Random House. Thomas Middelhoff, then the C.E.O.-designate of Bertelsmann, realized that purchasing other book companies was the only way to build its publishing business in America. In 1997, according to Middelhoff, he met S.I. Newhouse, who then owned Random House, and told him he was going to buy his company. Newhouse was intrigued, and three months later, amid complete secrecy, ''Operation Black,'' as the Random House acquisition was called, was complete. Olson, who maintains that the acquisition of Random House was his idea, ran the four-man Operation Black team and treated the acquisition like a military maneuver. There was even something called ''Operation Blue,'' Olson admitted, which served as a smoke screen to what he was really up to. ''Random House was the jewel in the crown of book publishing,'' Olson said. ''But they hadn't made money in 10 years.''

Everyone in publishing was nervous about the acquisition. ''People thought when Bertelsmann bought Random House, the sky was falling,'' Morton Janklow, a top agent, recalled. ''Olson was a businessman looking at publishing. He wanted to streamline it. Does that mean the sky is falling? No. Is the business changing? Yes. Absolutely. It had to. And it still has to.''

Olson had, according to several accounts, a complicated relationship with Middelhoff, who was then his boss at Bertelsmann. Charismatic and flamboyant, Middelhoff liked to say he was an American with a German passport. He prodded Bertelsmann to make a controversial investment in Napster. He dreamed of building a tower in Times Square with a bridge extending to the original Bertelsmann Building, the company's name in neon on the side of the bridge. ''Thomas liked a big profile,'' Stephen Rubin said. ''He was the face of Bertelsmann in America. No one outside the company knew Olson. If you thought of Bertelsmann, you thought of Thomas.''

A year ago, Middelhoff pushed the executive board to make a public offering of some of Bertelsmann's privately held stock in order to further expand. This outraged the Mohn family, and Middelhoff was abruptly forced to resign. In his place, the company promoted Gunter Thielen, who ran their printing companies. ''Olson will never admit it,'' one associate at Random House said, ''but he was happy to see Middelhoff go. Peter is, by nature, conservative, but he likes attention. Thielen was about to retire, his English is not good and he will not overshadow Olson, as Middelhoff did. With Thielen, Olson is clearly the guy in the U.S. He likes owning that world.''

There are those who say that Ann Godoff would not have been fired if Middelhoff had still been at Bertelsmann. A former high-ranking Bertelsmann executive said that two years ago Olson went to Middelhoff and told him that he wanted to fire Mehta. ''Olson felt that Sonny was too elitist in his tastes,'' the former executive said, ''that he was not integrated into the organization. Olson said, 'Sonny is a prince of publishing, and that made him impossible to control.' Olson said, 'Sonny won't listen to me.''' Reportedly, Middelhoff was outraged, but Olson wasn't finished: he went on to say that Mehta should be replaced with Ann Godoff. Middelhoff quickly vetoed the plan, and Mehta wasn't fired. ''That shows how poor a manager Peter Olson is,'' the former executive said. ''Sonny Mehta is one of the greatest editors of all time, and he also makes money for Random House. Olson would have fired him for not having mass taste.'' When confronted with this, Mehta expressed complete surprise.