Combining the Conglomerates: Penguin Random House

In 1935 Sir Allen Lane founded Penguin Books. Since then, Penguin Group (owned by Pearson PLC) has revolutionised the worldwide publishing industry. From Jane Austen to Charles Dickens to George Orwell, Penguin has brought us some of the most renowned classics of our time. It has helped shape the British public sphere with its books, debating the most topical of subjects from politics and science to theatre and the arts. But unfortunately, as we so often here, time brings all things to pass.

As I’m sure we are all now aware, just a few days ago there were talks of our beloved Penguin merging with the largest of the Big Six publishers: Random House, inc.. Random house was founded in 1927, and since 1998 has been owned by the German private media corporation Bertelsmann.  Publishing books by Lee Child and (I’m sure you all know) the no.1 best-selling author E. L. James. Random House has an annual revenue of £1.5bn. In comparison to this, Penguin’s annual revenue, last year, was £1bn.

The merging of the two conglomerates seems to be a direct result of the ever-growing success of e-books, in particular on reading devices such as Amazon’s Kindle. Kindle’s proving to be a hot-topic at the moment, as Wal-Mart removes Kindle products from its shelves. A recent report shows that Amazon owns almost 40% of all physical books and E-books, whereas Random House owns just fewer than 15%, and Penguin only 11%. With figures like this it seems both logical and sensible for the two corporations to merge. As only time will tell how long the publishing companies will last with the wide expansion of the online world. A wise move, if I may say so.

And it’s not just me saying it. There are talks of Rupert Murdoch’s News Corporation, which owns another of the Big Six publishers, HarperCollins, making a cash offer to buy Penguin outright. Although Penguin Chief, John Mackinson, seems to have snubbed this, stating that the deal with Bertelsmann’s Random house is ‘a done deal’ (Guardian, 2012).

One problem that seems to arise from the merging of the two companies is that felt by authors. Now that two of the Big Six publishers have merged, we are left with just four. And with Murdoch’s ever-reaching hands, who knows who will collaborate next? With fewer mainstream publishers, authors feel that there will be fewer opportunities to get their work published. This may, at first glance, seem a painstakingly obvious consequence. However, with less of the larger corporations, this can give rise to independent publishing companies who are trying to get their foot into the Big world of the publishers. Furthermore, with two of the largest publishers now conjoined we will hopefully see some new initiative into the world of publishing – both e-books and the physical – which will allow more authors opportunities for their work to be noticed.

With Pearson controlling 47% and Bertelsmann 53%, Penguin Random House will be by far the largest publishing company in the world. A complete mergence of both companies is thought to be completed by late 2013. With what seems like a wholly negative issue, with the disappearance of Penguin as we know it is in fact, for me, a positive one. With the rapid growth in sale of e-books, and the decline in sale of printed books, the coming together of these two multinationals may well be a step in the right direction. Perhaps the decline in printed books isn’t an issue at all. Perhaps it’s the conservative in me trying to hold onto our Penguin values… but on the other hand, probably not.

I hope to see Penguin Random House doing something different, something innovative, something that none of us expect, something that will change the world of publishing forever.

The world’s words are majorly in their hands.


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