Random House and Penguin merge to take on Amazon, Apple

Mon Oct 29, 2012 5:33pm EDT
 
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By Kate Holton

LONDON (Reuters) - Britain's Pearson and Germany's Bertelsmann plan to merge their publishers Penguin and Random House, aiming to gain the upper hand in their relationship with Amazon and Apple, the leaders in the ebook revolution.

Education and media publisher Pearson said on Monday the joint venture - which will bring under one roof fantasy novelist Terry Pratchett, "Fifty Shades of Grey" author EL James and 2012 Nobel prize winner Mo Yan - would be named Penguin Random House.

Confirmation of a deal came after months of Pearson board discussions and despite an informal approach from Rupert Murdoch's News Corp, which was interested in combining Penguin with its own Harper Collins publishing unit, a person familiar with the situation said.

News Corp declined to comment.

"The consumer publishing industry is going through a period of tumultuous change, propelled by digital technologies and the giant companies that dominate them," Pearson Chief Executive Marjorie Scardino said in an email to staff.

"The book publishing industry today is remarkable for being composed of a few large, and a lot of relatively small companies, and there probably isn't room for them all - they're going to have to get together."

Under the plan, Bertelsmann will own 53 percent of the venture and nominate five directors to the board, while Pearson would own the rest and nominate four. Both must retain their stakes in the venture for at least three years.

Penguin chairman and CEO John Makinson will be chairman of the new venture, and Random House CEO Markus Dohle will be its chief executive.   Continued...

 
Penguin books are seen in a used bookshop in central London October 29, 2012. REUTERS/Stefan Wermuth