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More merger talk

12 November 2012

Things are settling around the idea of Random House and Penguin merging, but there are plenty of dire predictions. Some think it will change the nature of publishing as we know it, others that it will lead to further consolidation.

The combined group will have 25 to 30% of the global books business. This sounds a lot and already there is talk of whether the merger will be referred to the regulatory agencies in various countries. Probably it will, although the outcome is less clear.

Rupert Murdoch made a counter-bid of £1 billion, but this appears to have been brushed aside, although the Pearson board is meeting to consider it. It appears that the merger was Marjorie Scardino's parting gift and her way of preserving the future of Penguin.

'The idea of this company is to combine the small company culture and the small company feeling on the creative and content side with the richest and most enhanced access to services on the corporate side' was what Markus Dohle, soon to be CEO of the merged company, had to say. This is enormously difficult but not impossible to do, as both Random House and Penguin have shown in the past, but you do have to trust your editors and allow them some editorial freedom.

The Sunday Times claimed that 'the extra clout would also embolden the merged company to take bigger risks with unknown authors, rather than rely on tried-and-tested celebrity stocking fillers.' Leaving on one side the fact that celebrity memoirs are one of the biggest gambles in the whole publishing scene, it actually seems more likely that an even bigger conglomerate will take even fewer risks. The pressure will be on the editors to play safe; corporations are inherently risk-averse.

Gayle Feldman, writing in the Daily Beast but drawing on her many years of experience as a book trade journalist at Publishers WeeklyInternational news website of book publishing and bookselling including business news, reviews, bestseller lists, commentaries, commented on the fact that Bennett Cerf, the founder of Random House and Allen Lane, the founder of Penguin, had discussed merging as long ago as 1956. She wrote: 'One cannot have an ecosystem with only "small fry" facing giants. Like it or not, some companies will need to function as a counterbalance if publishers are to survive as a species. The digital world seems to be accomplishing what Penguin and Random House's founders couldn't. For them, it was a dream. Now, it's a necessity.'