Random House, Penguin Publishing Houses To Merge

Executives of the publishing giants Bertelsmann and Pearson announced on Monday that they will pursue a merger of their publishing houses, Random House and Penguin. The united publishing companies are set to become a large and influential force in publishing.

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We got news today of a wedding of sorts between two titans of the publishing industry. The European conglomerates that own Random House and Penguin have agreed to join forces. The new effort will be called the Penguin Random House.

NPR's Lynn Neary reports that the agreement comes as the publishing business struggles to turn a profit in the age of eBooks and Amazon.

LYNN NEARY, BYLINE: Under the consolidation agreement, the German company Bertelsmann, which owns Random House, will control 53 percent of the new company. The British conglomerate Pearson, which owns Penguin, will control the remaining 47. The agreement brings together two of this country's biggest publishing houses. Random House alone is home to some of the most popular authors in the world.

STUART APPLEBAUM: We have Salman Rushdie, John Grisham. We have Laura Hillenbrand, Lee Child. We have E.L. Doctorow, E.L. James.

NEARY: That's Random House spokesman Stuart Applebaum naming just a few of the authors on his company's list. Penguin's most popular authors include John Sanford, Ken Follett, Patricia Cornwell, and Junot Diaz. The hope is that combining these two publishing powerhouses into one company will make it easier to cope with the increasing popularity of eBooks, which can be bought at a much lower price than print books.

Given that challenge, James McQuivey of Forrester Research says consolidation was inevitable.

JAMES MCQUIVEY: Yeah, the number one thing consolidation does for these large media companies is it allows them to share the burden of continuing to provide the physical products, in this case printed books, which are still a very important part of the business, but they are a very expensive part of the business and they're not generating the growth that eBooks are. So you pool the physical resources of a big publisher like Random House with another one like Penguin and you end up saving a lot of that money.

NEARY: The current CEO of Random House, Markus Dohle, will be the new chief executive of Penguin Random House. John Makinson, CEO of Penguin, will be chairman. Both executives sought to reassure employees and others who will be affected by the merger. Dohle said the new company will provide unprecedented resources, and Makinson said such resources will allow the new company to publish the broadest range of books on the planet.

But McQuivey says there could be casualties, literary agents, especially, might be hurt.

MCQUIVEY: Agents are probably the one entity that we can clearly point to as damaged by this, especially if it continues to happen, especially if Simon and Schuster combines with Hachette or whatever other combinations might happen because the agents really rely on being able to play the publishers against each other. And when there are fewer publishers to play against each other, it just mathematically means you have fewer options.

NEARY: The agreement to merge the two publishers is subject to governmental approval and is expected to be completed before the end of next year. Lynn Neary, NPR News, Washington.

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