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Penguin Random House change - Bertelsmann to buy out partner Pearson

16 January 2017

The first major publishing news of the New Year has been the announcement that Pearson, having declared a profit warning because of change and volatility in the educational market and declining sales in higher education, is intending to offload its 47% stake in Penguin Random House - and its partner Bertelsmann is keen to acquire it.

This corporate manoeuvring may not seem close to home for many authors, but it's worth reflecting that the company sells 800 million books, e-books and audiobooks a year, making the group the clear number one in the international publishing industry, both commercially and possibly in terms of creativity. It also regards itself as ‘the publisher of choice for authors'.

Penguin Random House was formed in 2013 when Bertelsmann's Random House merged with Pearson's Penguin, with shares split 53:47 in the German conglomerate's favour. Under the terms of the 2013 deal, Pearson has the option of issuing an exit notice from January 1, 2017, which it has now done.

The group is a very substantial player internationally, with around 250 different publishers worldwide, publishing more than 15,000 new books a year. In 2015 the company generated revenues of €3.7 billion (more than £3 billion) and (ebitda) earnings of €557 million (£454.2 million).

Elsewhere, publishing predictions for 2017 appear to revolve around continued demand for print books, but with growth especially in audio books, long the Cinderella of the book business. There is also an expectation that children's publishing will continue to surge ahead, continuing its spectacular growth.