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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Beware of tea: the cuppa has started wars and ruined lives

. . . and it once led F Scott Fitzgerald to humiliate himself.

A drink sustains me – one that steams companionably as I write. It is hot, amber and fragranced differently from any wine; nor does it have wine’s capacity to soften and blur. I’ve never understood how the great drunks of literature, Ernest Hemingway, F Scott Fitzgerald and their like, ever put anything on the page more worthwhile than a self-involved howl, though even Hemingway apparently finished the day’s writing before beginning the day’s drinking.

Tea is more kindly, or so I’d always thought. Those aromatic leaves, black or green, rolled and dried and oxidised, have some of wine’s artistry but none of its danger. Even their exoticism has waned, from a Chinese rarity (“froth of the liquid jade”), for which 17th-century English traders were made to pay in solid silver, to a product that can be found dirt cheap on supermarket shelves.

There are even home-grown teas now. The Tregothnan estate in Cornwall has supplemented its ornamental rhododendrons and camellias with their relative camellia sinensis, the tea plant, while Dalreoch in the Scottish Highlands grows a white (that is, lightly oxidised) tea, which is smoked using wood from the surrounding birch plantations. Tellingly, this local version is priced as steeply as the imported rarity once was.

I enjoy a simple, solitary mug, but I also appreciate communal tea-drinking – the delicate tea warmed with water at 85°C (a little higher for sturdier black blends), the teapot and china, the pourer volunteering to be “mother”, as if this were a liquid that could nurture. But in reality, tea is not so gentle.

Those long-ago English traders disliked haemorrhaging silver, so they started exporting opium to China from India and paying with that. This was a fabulous success, unless you happened to be Chinese. In 1839, a commissioner attempted to clamp down on the illegal and harmful trade, and the result was the Opium Wars, which the Chinese lost. “Gunboat diplomacy” – a phrase that surely constitutes froth of a different kind – won England a great deal of silver, a 150-year lease on Hong Kong and an open tea market. China received a potful of humiliation that may eventually have helped spark the Communist Revolution. As many of us have recently realised, there is nothing like economic mortification to galvanise a nation to kick its leaders.

Later, the tea bush was planted in India, Ceylon and elsewhere, and the fragrant but bitter brew for the upper classes became a ubiquitous fuel. But not an entirely sweet one: just as the opium trade ensured our tea’s arrival in the pot, the slave trade sweetened it in the cup. Even today, conditions for tea workers in places such as Assam in north-east India are often appalling.

Scott Fitzgerald also had tea trouble. When invited round by Edith Wharton, he frothed the liquid jade so assiduously with booze beforehand and risqué conversation during (a story about an American tourist couple staying unawares in a Paris bordello) that he was nearly as badly humiliated as those 19th-century Chinese. Wharton, unshocked, merely wondered aloud what the couple had done in the bordello and afterwards pronounced the entire occasion “awful”.

Some would blame his alcoholic preliminaries, but I’m not so sure. Tea has started wars and ruined lives; we should be wary of its consolations. On that sober note, I reach for the corkscrew and allow the subject to drive me softly, beguilingly, to drink.

Nina Caplan is the 2014 Fortnum & Mason Drink Writer of the Year and 2014 Louis Roederer International Wine Columnist of the Year for her columns on drink in the New Statesman. She tweets as @NinaCaplan.

This article first appeared in the 27 April 2017 issue of the New Statesman, Cool Britannia 20 Years On

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