A publishing powerhouse

Could a merger between Penguin and Random House stop Amazon in its tracks?

After the FT reported that talks had been held between two of the world’s “big six” publishers, Penguin and Random House, an official statement has finally been made. Pearson, the UK-listed education specialist (and the world’s single largest book publisher), who owns both Penguin and the FT, released the following announcement: “Pearson confirms that it is discussing with Bertelsmann a possible combination of Penguin and Random House. The two companies have no reached an agreement and there is no certainty that the discussion will lead to a transaction. A further announcement will be made if and when appropriate.”

Random House is owned by the German media conglomerate Bertelsmann, whose ill-fated merger with Sony (creating Sony-BMG) has left them anxious to take the lead on any potential deal. Thomas Rabe, Bertelsmann’s chief executive, commented on the “pitfalls of putting creative businesses together”, which mean that one side must take ultimate control. “We have the ambition to lead,” he said.

A merger between the two companies – whose brands, it should be noted, are distinct and unlikely to be hastily dissolved – would create a 25 per cent market share, large enough to come under scrutiny from the OFT and Competition Commission. A second factor which may hinder a potential merger is the ongoing allegations of price-fixing in the US, a suit which Penguin has repeatedly contested.

The elephant in the room, as ever, is Amazon. The internet retailer, whose UK business operates from the company’s base in Luxembourg, continues to plough millions into its ebook infrastructure despite huge losses. Described by Waterstones head James Daunt as a “ruthless, money-making devil” and of “using authors as a financial football” by Curtis Brown chairman Jonathan Lloyd, the company facilitates and encourages self-publishing, which perhaps signals the endgame of their repeated attempts to undermine present publishing models. “Penguin House” may just have the reputation, power and resources to stop the internet giant in its tracks.

Phil Jones, editor of the publishing trade magazine The Bookseller, said: “The merger of Penguin and Random house would create a powerhouse of a consumer publisher across books, ebooks and apps.” Analyst Lorna Tilbian from Numis Securities concurs: “Consolidation is the order of the day,” she said. “Technology and tablet computers have given it extra momentum. They [publishers] have got to gang together to have enough clout to take on the technology giants that have transformed the industry.”

Update: This morning the merger between Penguin and Random House was confirmed. Check out The Bookseller for more information.

Berthold Lubetkin's Penguin Pool at London Zoo (Photograph: Getty Images)

Philip Maughan is Assistant Editor at the New Statesman.

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The mizzly tones of Source FM

Drewzy (male, fortysomething) composedly, gently, talks of “time condensing like dew on a damp Cornish window”.

A mizzly Thursday in Falmouth and the community radio presenters Drewzy and the Robot are playing a Fat Larry’s Band single they picked up in a local charity shop. Drewzy (male, fortysomething) composedly, gently, talks of “time condensing like dew on a damp Cornish window”, and selects a Taiwanese folk song about muntjacs co-operating with the rifles of hunters. The robot (possibly the same person using an electronic voice-changer with a volume booster, but I wouldn’t swear to it) is particularly testy today about his co-host’s music choices (“I don’t like any of it”), the pair of them broadcasting from inside two converted shipping containers off the Tregenver Road.

I am told the Source can have an audience of up to 5,500 across Falmouth and Penryn, although when I fan-mail Drewzy about this he replies: “In my mind it is just me, the listener (singular), and the robot.” Which is doubtless why on air he achieves such epigrammatic fluency – a kind of democratic ease characteristic of a lot of the station’s 60-plus volunteer presenters, some regular, some spookily quiescent, only appearing now and again. There’s Pirate Pete, who recently bewailed the scarcity of pop songs written in celebration of Pancake Day (too true); there’s the Cornish Cream slot (“showcasing artists . . . who have gone to the trouble of recording their efforts”), on which a guest recently complained that her Brazilian lover made her a compilation CD, only to disappear before itemising the bloody tracks (we’ve all been there).

But even more mysterious than the identity of Drewzy’s sweetly sour robot is the Lazy Prophet, apparently diagnosed with PTSD and refusing medication. His presenter profile states, “I’ve spent the last year in almost total isolation and reclusion observing the way we do things as a species.”

That, and allowing his energies to ascend to a whole new plateau, constructing a two-hour Sunday-morning set – no speaking: just a mash-up of movie moments, music, animal and nature sounds – so expert that I wouldn’t be surprised if it was in fact someone like the La’s Salinger-esque Lee Mavers, escaped from Liverpool. I’m tempted to stake out the shipping containers.

Antonia Quirke is an author and journalist. She is a presenter on The Film Programme and Pick of the Week (Radio 4) and Film 2015 and The One Show (BBC 1). She writes a column on radio for the New Statesman.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle