Publishing powerhouses Pearson and Bertelsmann announced today they’re creating a joint venture (JV) to pool their respective consumer publishing businesses, Penguin (@penguinusa) (see its religion titles) and Random House (@randomhouse) (see its religion titles), in a bid to go the distance in the digital age.
TechCrunch says
Penguin and Random House will combine to form a JV named Penguin Random House, the pair said today, with Bertelsmann owning 53% of the new JV and Pearson owning 47%. They said the combined organization will have a “stronger platform and greater resources to invest in rich content, new digital publishing models and high-growth emerging markets.” They also envisage savings from pooled resources....
In their joint announcement there is no mention of Amazon but the ecommerce giant is the elephant in the room — having disrupted traditional bookselling models, driving down the price of books by selling physical books online, and championing the sale of digital books via its Kindle ereaders. Amazon is also treading directly on publishers’ toes by taking on a publishing role itself.
According to The New York Times,
Thomas Rabe, chief executive of Bertelsmann, said in an interview that the merger would allow the combined company to invest more in digital operations and emerging markets, where book sales are growing faster than in developed markets like the United States and Western Europe.
Publishers Weekly reports,
The announcement came after word leaked Sunday that News Corp. was considering making an offer for Penguin, but Penguin Group chairman John Makinson said the Pearson board is committed to the Bertelsmann deal.
See the letters of reassurance Markus Dohle, CEO of Random House, sent to booksellers, authors, and agents.
Although the two parties have signed the deal, final approval will need to be made by US government regulators; that’s not expected until the second half of 2013. The combination of the two companies will produce a publishing house with worldwide revenue of about $4 billion.
Update: See The New York Times article, "Random House and Penguin Merger Creates Global Giant."
Update: See The Telegraph article, "Rupert Murdoch criticizes Penguin Random House as 'faux merger.'"
Update: Hear NPR's report, "Random House, Penguin To Merge."
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