July 2, 2013

A truly global monstrosity: Penguin and Random House complete merger


One big fucking publishing house.

Yesterday, parent companies Bertelsmann and Pearson closed the merger of Random House and Penguin, ending our long national nightmare and creating one big fucking publishing house. The new venture will be called Penguin Random House, not Random House Penguin, and definitely not Random Penguin or Penguin House or anything even remotely cute. (Hopefully the merger will also bring a stop to Random Penguin jokes, which stopped being clever about six seconds after the first one was made.) Penguin Random House will publish “about a quarter of the world’s English language books,” according to The Financial Times, which is truly a ton of books.

A quarter of the world’s English language books will generate an annual revenue of $3.9 billion. (You can check out a list of countries whose entire GDP will be outstripped by Penguin Random House here.) In a statement released yesterday, Penguin Random House said, “Together, we can and will invest on a much larger scale than separately in diverse content, author development and support, the publishing talent, the entire spectrum of physical and digital book acquisitions, production, marketing, and distribution, and also in fast-growing markets of the future.” Or, you know, writing and shit.

Although the closing of the merger represents a significant step for the brand new behemoth, there are still a number of details to be ironed out—as Ozzy Osbourne sings on Black Sabbath‘s excellent new album, “Is this the end of the beginning, or the beginning of the end?”—and there are an exceptional number of unanswered questions, many of which have to do with staffing. Although the new literary leviathan announced a number of leadership changes yesterday, a larger restructuring, which will likely include layoffs, is expected. As ForbesJeremy Greenfield wrote yesterday:

Both companies have large finance, legal, human resources and other back-office departments. While a merger doesn’t mean that an entire side’s accounting department will be let go, but the new company probably won’t have need for everyone in it and, of course, there can only be one person in charge….

Both companies had competing imprints (a smaller publishing division that often publishes a certain kind of book), editors and publishers. It’s likely that some of these talented publishing professionals will be seen as redundant corporately and be let go.

Judging by its press releases and comments from its new commanding officers, the publishing equivalent of Frankenstein’s Monster is extraordinarily proud of its status as a “global publisher.” Yesterday Bertlesmann CEO Thomas Rabe touted the fact that the company is “accelerating the transformation to digital and leveraging the entire range of possibilities it offers. We also are promoting regional growth, especially in the emerging markets of China, India, and Brazil,” while a press release noted that:

“Penguin Random House will combine the adult and children’s fiction  and nonfiction print and digital trade book publishing businesses of Penguin and Random House in the U.S., U.K., Canada, Australia, New Zealand, and India; Penguin’s trade publishing activity in Asia and South Africa; Dorling Kindersley worldwide; and Random House’s companies in Spain, Mexico, Argentina, Uruguay, Colombia, and  Chile.”

There have been global publishing companies before this one, but Penguin Random House thinks it’s a cut above: on its website it touts itself as being “The world’s first truly global publishing company,” whatever that means. Its new website also includes a “Company History” interactive timeline, which is kind of hilarious when you consider that it says “Est. July 1, 2013” on its homepage.

But Penguin Random House is clearly trying to use “global” in some sort of Gladwellian way—it’s a word meant to communicate exactly how modern the company is—and Penguin Random House wasn’t created for reach alone. From Matthew Flamm‘s excellent overview of the merger:

Analysts have described the merger as a response to a shrinking bookselling environment and the growing power of Amazon. A powerhouse publisher, it’s believed, could have more weight with the e-tailer, which is known to use brass-knuckled bargaining tactics, like removing the “Buy” buttons from a publisher’s books, to get what it wants.

Flamm also spoke to our co-publisher Dennis Johnson about what the merger means for small presses like this one:

Small publishers were also concerned about a behemoth tilting the literary playing field.

Dennis Johnson, co-publisher of Brooklyn-based Melville House, estimates that Penguin Random House will control more than 50% of the market for literary fiction. That will give the company outsized power with hard-pressed independent bookstores, where shelf space is at a premium and bills are often paid in order of the publisher’s bargaining power, he said.

So, if you publish one quarter of the world’s English language books, you can say and do pretty much whatever you want. While—full disclosure—PRH owns the distributor of our books (which I guess will now be called Penguin Random House Distribution Services?) and it’s good I guess to have the 800-pound gorilla on your side, we still see this as potentially, you know, problematic.



Alex Shephard is the director of digital media for Melville House, and a former bookseller.