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 a freelance writer in Berlin and a former Assistant Editor at the New Statesman.

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SRSLY #99: GLOW / FANtasies / Search Party

On the pop culture podcast this week: the Netflix wrestling comedy GLOW, a new fanfiction-based web series called FANtasies and the millennial crime drama Search Party.

This is SRSLY, the pop culture podcast from the New Statesman. Here, you can find links to all the things we talk about in the show as well as a bit more detail about who we are and where else you can find us online.

Listen using the player below. . .

. . .or subscribe in iTunes. We’re also on StitcherRSS and SoundCloud – but if you use a podcast app that we’re not appearing in, let us know.

SRSLY is hosted by Caroline Crampton and Anna Leszkiewicz, the NS’s assistant editor and editorial assistant. We’re on Twitter as @c_crampton and @annaleszkie, where between us we post a heady mixture of Serious Journalism, excellent gifs and regularly ask questions J K Rowling needs to answer.

The Links

GLOW

The show on Netflix.

Two interesting reviews: New York Times and Little White Lies.

Screen Rant on the real life wrestling connections.

FANtasies

The show on Fullscreen.

Amanda Hess’s NYT column about it.

Search Party

The show on All4.

For next time:

We are watching Happy Valley.

If you’d like to talk to us about the podcast or make a suggestion for something we should read or cover, you can email srslypod[at]gmail.com.

You can also find us on Twitter @srslypod, or send us your thoughts on tumblr here. If you like the podcast, we’d love you to leave a review on iTunes - this helps other people come across it.

We love reading out your emails. If you have thoughts you want to share on anything we’ve discussed, or questions you want to ask us, please email us on srslypod[at]gmail.com, or @ us on Twitter @srslypod, or get in touch via tumblr here. We also have Facebook now.

Our theme music is “Guatemala - Panama March” (by Heftone Banjo Orchestra), licensed under Creative Commons. 

See you next week!

PS If you missed #98, check it out here.

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