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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Brexit… Leg-sit

A new poem by Jo-Ella Sarich. 

Forgot Brexit. An ostrich just walked into the room. Actually,
forget ostriches too. Armadillos also have legs, and shoulder plates
like a Kardashian.  Then I walked in, the other version of me, the one
with legs like wilding pines, when all of them

are the lumberjacks. Forget forests. Carbon sinks are down
this month; Switzerland is the neutral territory
that carved out an island for itself. My body
is the battleground you sketch. My body is
the greenfield development, and you
are the heavy earthmoving equipment. Forget
the artillery in the hills
and the rooftops opening up like nesting boxes. Forget about

the arms race. Cheekbones are the new upper arms
since Michelle lost out to Melania. My cheekbones
are the Horsehead Nebula and you are the Russians
at warp speed. Race you to the finish. North Korea

will go away if you stop thinking
about it. South Korea will, too. Stop thinking
about my sternum. Stop thinking about
the intricacy of my mitochondria. Thigh gaps
are the new wage gaps, and mine is like
the space between the redwood stand
and the plane headed for the mountains. Look,

I’ve pulled up a presentation
with seven different eschatologies
you might like to try. Forget that my arms
are the yellow tape around the heritage tree. Forget
about my exoskeleton. Forget
that the hermit crab
has no shell of its own. Forget that the crab ever
walked sideways into the room.
Pay attention, people.

Jo-Ella Sarich is a New Zealand-based lawyer and poet. Her poems have appeared in the Galway Review and the Poetry New Zealand Yearbook 2017.

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear