Penguin-Random House Merger Would Create Publishing Monster

Penguin Books Random House - H 2012

Penguin Books Random House - H 2012

The combined companies, which publish everything from "Fifty Shades of Grey" to "The Hardy Boys, would control about 25 percent of the book market.

The owners of Penguin Books and Random House are discussing a merger of the two publishing giants. 

Pearson, the British owner of Penguin, issued a statement today confirming the talks with German conglomerate Bertelsmann:

"Pearson notes recent media coverage regarding Penguin, its consumer publishing division, and Random House (part of Bertelsmann). Pearson confirms that it is discussing with Bertelsmann a possible combination of Penguin and Random House. The two companies have not reached agreement and there is no certainty that the discussions will lead to a transaction. A further announcement will be made if and when appropriate." 

If consummated, the merger would herald a significant consolidation in the book business, combined the two houses control about 25 percent of the market and total revenue would be approximately $3 billion.

Random House includes such imprints as Alfred A. Knopf/Vintage (publisher of this year's smash hit Fifty Shades of Grey), as well as Crown and Random House Children's Books.

The company boasts it has published more than 50 Nobel Prize winners and 100 Pulitzer honorees.

Penguin's imprints include Viking, Dutton and Berkley.

Its stable of authors range from Tom Clancy to The Hardy Boys and Junot Diaz to Judy Blume.

According to the Financial Times, analysts value Penguin at $1-1.5 billion. 

Random House has moved strongly into ebooks, with about 25 percent of its revenue coming digitally now.

Pearson is considered a strong player in the education market.

Given the size of the two companies any deal is likely to face regulatory scrutiny in the United States and Europe. 

The Department of Justice sued five publishers this year, including Penguin, for allegedly colluding on ebook pricing.  Hachette, Simon & Schuster and HarperCollins settled with Justice in April.

Penguin (along with Macmillan) is still contesting the government's charges.

Random House was not one of the five defendants in the suit.