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Penguin and Random House complete merger

Writers and readers' groups say there will be less diversity and less price competitiveness because of the merger.

By Husna Haq / October 29, 2012

Bertelsmann will own 53 percent of the new company and Pearson will own 47 percent.

Michael Sohn/AP

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It’s official! Penguin, of Britain’s Pearson, and Random House, of Germany’s Bertelsmann, are tying the knot.

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The new venture, to be named Penguin Random House, will become the world’s largest publisher and control about 25 percent of all books published in the US.

The decision (about which rumors leaked last week) illustrates a growing trend in the publishing industry toward consolidation as a means to provide a more united front against the changes the industry is facing, including the rise of digital books, the growing power of web retailers like Amazon, and the erosion of traditional bricks-and-mortar bookstores.

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“The consumer publishing industry is going through a period of tumultuous change, propelled by digital technologies and the giant companies that dominate them," Pearson Chief Executive Marjorie Scardino said in an email to staff, according to Reuters. “The book publishing industry today is remarkable for being composed of a few large, and a lot of relatively small companies, and there probably isn't room for them all – they're going to have to get together.”

By merging, the companies “will create a publishing giant that will have more heft at a time when the book business is being rocked by the rise of online retailers and e-books,” writes the Wall Street Journal.

“Together, the two publishers will be able to share a large part of their costs, to invest more for their author and reader constituencies and to be more adventurous in trying new models in this exciting, fast-moving world of digital books and digital readers,” said Marjorie Scardino, Pearson's chief executive.

Under the terms of the agreement, Bertelsmann (Random House) will own 53 percent of the joint venture while Pearson (Penguin) will own 47 percent.

As many have pointed out, the union of the two publishing houses will result in a medley of odd bedfellows, including the likes of Patricia Cornwell, Nora Roberts, erotic fiction writer E.L. James, George R.R. Martin, and 2012 Nobel Prize winner Mo Yan.

To some, however, the literary matrimony is anything but happily ever after. Writers and readers’ groups are speculating there will be less competition, less diversity, and less price competitiveness as a result of the merger.

“Telecom companies, airlines, banks – it's hard to think of a single high-stakes merger that's resulted in lower prices and more innovation,” writes the LA Times. “It's pretty simple: The less competition you have, the less pressure there is to fight for customers… With only a handful of major players, it seems likely that sellers will be free to set their own prices, rather than reflect the actual cost of distributing literature in digital form, which is fairly minuscule.”

“For those who love to read,” continued the Times, “admittedly, a dying breed – this isn’t good news.”

Husna Haq is a Monitor correspondent.

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