Blog # 9: Random House and Penguin Merger

Eric Pfanner's article this week was about the Pearson and Bertelsmann companies combining their media publishing divisions. The two companies, both based in Europe, are of the biggest English-language publishers around today, and the merging of these companies would give them over a quarter of the shares in the global market. Random House, ran by Bertelsmann, will receive fifty-three percent of the profits, while Penguin, owned by Pearson, will get the remaining forty-seven. The combined companies are expected to receive an estimated $3.8 billion in annual revenues. The two have agreed to share executive supervision and oversight of the company; John Makinson (from Penguin) will become the chairman, and Markus Dohle (from Random House) will be the chief executive. Bertelsmann's chief executive explained in an interview some of the benefits and reasons behind the merger. First, the merger allows more time and money to be invested in digital matter and also new and upcoming markets. Secondly, the resulting back-office job cuts will greatly benefit the authors financial gain. He also goes on to mention that the respective identities of the publications will not be affected by the merge. John Makinson, Penguin's chief executive added the following, "consolidation was inevitable as the industry adapts to the imperatives of the digital revolution." The main flaw concerning the merge is that the shareholders have no say or approval in the matter, and since Bertelsmann is privately owned, there's nothing the competition can do to stop it. Another factor is the literary agents who are worrying about the number of author outlets diminishing from all the consolidations. Overall, the merge can't mean too much harm to global welfare, the smaller publication groups won't have to print as many best-sellers which means more focus on up and coming writers. As an added bonus, the new combined company will offer an even larger, immense list of selections to choose from.

http://www.nytimes.com/2012/10/30/business/global/random-house-and-penguin-to-be-combined.html?ref=business