The above two titles may eventually have more in common than their genre and cover designs.

In a tersely-worded “Statement on media coverage regarding Penguin” yesterday, Pearson set off a round of speculation and gossip in the publishing world:

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.

Reports in European news sources, beginning with a story in Germany’s Manager Magazin on Monday, forced Pearson’s response.  When Bertelsmann, which owns Random House, was asked to comment, they simply pointed to the Penguin statement.

Speculation is now rife as to the reasons for proposed merger, with some saying it’s necessary because ebooks have changed the business and others that publishers need to gain enough clout to stand up to Amazon. Those are side issues, however; the major reason is that Pearson is focusing on their education business, and Bertelsmann’s new CEO Thomas Rabe has promised major acquisitions and strategic partnerships.

The New York Times story quotes literary agents saying that the deal will not be good for authors. Says agent David Kuhn, “a shrinking book industry could be compared to the situation in Hollywood, where studios under financial pressure now focus on churning out a handful of blockbusters a year, rather than taking risks on smaller films.”

If the merger were in effect today, seven of the fifteen NYT Fiction best sellers would be published by the new company.

Whatever the speculation, this is far from a done deal. There are still hurdles to jump, like gaining approval from U.S. and U.K. regulatory agencies (although, as many news stories point out, those agencies have allowed the music business to shrink to three major companies). The most meaningful part of Pearson’s statement may be the “if” in the final line.

This entry was posted on Friday, October 26th, 2012 at 8:53 am and is filed under Publishers, Publishing Business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.