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    Random House and Penguin to combine, strengthen position against Apple and Amazon

    Random House and Penguin to combine, strengthen position against Apple and Amazon

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    Two of the world’s four top English language publishers, Random House and Penguin, are about to be unified, thanks to a new joint venture between their parent companies Bertelsmann and Pearson. The latter announced in a press release that a deal is in place, with Bertelsmann receiving a 53 percent stake while 47 percent goes to Pearson. And while specifics of the deal haven't been disclosed, The Wall Street Journal is reporting figures of between $2 and $3 billion. That's roughly the equity value of the joint venture, which means it's unlikely any money is changing hands.

    The combination could account for a quarter of UK and US book sales, reported The Financial Times on rumors of the impending deal. But the broader competition is with internet retailers like Apple and Amazon, the latter of which owns 90 percent of the UK ebook market, according to The Guardian. The hope is likely that increased economies of scale can help drive profits while securing a larger share of the market can serve the company in negotiations with increasingly-powerful resellers, a point that Pearson's outgoing CEO, Marjorie Scardino, made to The AFP:

    "Together, the two publishers will be able to share a large part of their costs, to invest more for their author and reader constituencies and to be more adventurous in trying new models in this exciting, fast-moving world of digital books and digital readers."

    Any proposed deal would of course be subject to regulatory approval, and courts haven't proven very friendly to perceived anticompetitive behavior in the publishing sector. We’ll be sure keep you posted as the story unfolds.