Parent companies Bertelsmann and Pearson have issued a statement yesterday that the two sides were in negotiations to merge Penguin and Random House. The statement said; “Pearson confirms that it is discussing with Bertelsmann a possible combination of Penguin and Random House.”
If this deal occurs, which some said is likely to happen will be the largest publishing merger in USA history. Publishers Weekly broke down the numbers and said “In 2011, Random House had worldwide revenue of 1.75 billion euros ($2.2 billion at current exchange rates) while Penguin Group had total sales of 1.04 billion pounds ($1.70 billion at current rates). Their combined American operations would have sales of about $1.8 billion, giving Random House Penguin about a 16% share of the trade market based on BookStats industry estimates of trade sales of just under $12.5 billion (excluding religion).”
Pearson owns both Penguin and the Financial Times. Rampant speculation on the merger occurred when 15 year CEO Dame Marjorie Scardin decided to call it quits a few weeks ago, and critics claimed the Financial Times would be sold. New CEO John Fallon is at the helm and lacks a significant publishing background. He has stated that the company really wants to disinvest themselves of excess baggage and focus on the education industry. If they merger were to occur, it would provide Pearson with the funds that it needs to run both publishing AND education.
The deal is poised to benefit both sides and give both their genre specific imprints the ability to tap into the same resource pool. This would include Ace, Alfred A. Knopf, Anchor, Author Solutions, Avery, Ballantine, Bantam, Berkley, Blue Rider Press, Current, Del Rey, Delacorte, Dell, Dial, Doubleday, Dutton, ESPN, Everyman’s Library, , G.P. Putnam’s Sons, Golden Books, Gotham Books, Grosset & Dunlap, HP, Hudson Street Press, Jeremy P. Tarcher, Jove, Modern Library, Nan A. Talese, New American Library, Nickelodeon, Obsidian, One World, Onyx, Pantheon, Philomel, Plume, Portfolio, Prentice Hall, Presido, Price Stern Sloan, Razorbill, Riverhead, Schocken, Schwartz & Wade, Signet, Spectra, Spiegel & Grau, Step Into Reading, Stepping Stone, Sylvan Learning, Viking, Villard, Vintage.
Phil Jones the editor of the Bookseller, told the Guardian “The merger of Penguin and Random House would create a powerhouse of a consumer publisher across books, ebooks and apps. In the UK, the combined market share takes them beyond 25%, meaning any deal would likely face some kind of scrutiny from competition authorities. Even if they had to sell bits of the businesses to make it happen, it would still create by far the largest such group in the English-speaking world.speaks volumes.