Random House, Penguin May Merge

[joehunt]

If a deal does go through, it will unite the two largest trade houses in the U.S., including the two dominant publishers of mass market paperbacks. In 2011, Random House had worldwide revenue of 1.75 billion euros ($2.2 billion at current exchange rates) while Penguin Group had total sales of 1.04 billion pounds ($1.70 billion at current rates). Their combined American operations would have sales of about $1.8 billion, giving Random House Penguin about a 16% share of the trade market based on BookStats industry estimates of trade sales of just under $12.5 billion (excluding religion). With that type of market share, it would be difficult for Amazon, or any other online retailer, to turn off buy buttons if they disagreed over some business decision, one analyst noted.

http://www.publishersweekly.com/pw/b...may-merge.html

[fjtorres]

Consolidation often precedes extinction.
But I have a hunch the DOJ and/or FTC will have something to say about this in the wake of the collusion conspiracy.

[Daithi]

Random Penguin or House Penguin?

Either way, I'm not so sure that this is good for the book publishing industry and public.

[Apache]

Originally Posted by Daithi

Random Penguin or House Penguin?

Either way, I'm not so sure that this is good for the book publishing industry and public.

I always said that when Trailways and greyhound merged they should have named the new company Trailhound.
Apache

[MikeB1972]

Gotta be Penguin House

And the soon to be release Igloo imprint

[Apache]

Who wants to buy books from some Random Penguin?
Apache

[elemenoP]

The last major publisher to offer library ebooks joins merges a publisher that (mostly) forbids it. (Penguin will not work with Overdrive, they are in a pilot program with 3M right now but so far nothing has come of it.) So whose policies will win out? I think library ebook readers (like myself) should be very worried.

eP

[kennyc]

Originally Posted by MikeB1972

Gotta be Penguin House

And the soon to be release Igloo imprint

But this "combining" is pretty typical in a shrinking/consolidating market, many semiconductor and computer and phone companies....etc...

[jbcohen]

I still think post-merger the company will be in a better position to raise book prices and the average NY Times bestseller paperback prices will be equal to that of the hard back prices in the post-merger company.

[Daithi]

I like the Igloo imprint idea. Nice job MikeB1972.

[HomeInMyShoes]

Originally Posted by elemenoP

The last major publisher to offer library ebooks joins merges a publisher that (mostly) forbids it. (Penguin will not work with Overdrive, they are in a pilot program with 3M right now but so far nothing has come of it.) So whose policies will win out? I think library ebook readers (like myself) should be very worried.

eP

Agreed.

[elcreative]

Originally Posted by fjtorres

Consolidation often precedes extinction.
But I have a hunch the DOJ and/or FTC will have something to say about this in the wake of the collusion conspiracy.

Why... not even close to having a dominant percentage of the market and perfectly normal practice when consolidating in a potentiallly shrinking/changing market. Not everything is a great conspiracy or needs the interference of government in commercial matters...

[Blossom]

I wonder what effect this would have on libraries? Random House allows Libraries to purchase at a huge price their books but Penguin if I remember right stopped all new releases from being available.

It's also interesting that Penguin who is involved in the Agency pricing lawsuit is trying to merge with Random House who is not.

[fjtorres]

Originally Posted by elcreative

Why... not even close to having a dominant percentage of the market and perfectly normal practice when consolidating in a potentiallly shrinking/changing market. Not everything is a great conspiracy or needs the interference of government in commercial matters...

Dominant percentage is whatever the bureaucrats and lawyers say it is.
(Just ask GE about how the EU torpedoed *their* merger with Honeywell. Just 'cause.)

The very publisher-friendly article in the OP tells you why the merger will be looked upon askew: no retailer will be able to do without their books so they won't have any meaningful leverage in negotiations.
That is by anybody's definition "too much" market power.
Achieving "too much" market power by merger instead of by native growth is a common reason to block mergers.

And doing this right on the heals of an antitrust action for conspiracy to collude and raise prices? Where one of the merger partners used *its* market power to force a top-rank retailer to pressure the other merger partner to conform to the conspiracy's terms?
Oh, yeah; that is going to go down well at the DOJ...

[Fbone]

Pearson stated that they want to spin off their educational division prior to or during any possible merger. Even so 16% of market doesn't seem scary high.