Mergers and Acquisitions: Random House and Penguin
“The two companies have not reached agreement and there is no certainty that the discussions will lead to a transaction.” I think it’s safe to say it is far too early for us to be predicting what colour hair children of a union between Penguin and Random House would lead to, given they themselves haven’t committed to anything more than a date with one another, but when has the lack of a concrete announcement of something stopped media speculation in the past? Still, I feel I’d be remiss to ignore it, given the second most exciting publishing news last week was the appearance of Kindle in bookshops. [Author note: it is not too early. They have finalised the details of the merge this morning, but I’m leaving this paragraph in. News moves fast.]
It’s a pretty exciting beast – a publishing house with the potential share of around 25% of the UK market, hitting nearly 10% above the closes competitor. It’s easy to see how this could be an appealing thing for authors – the level of expertise in a combined publishing house would be pretty awesome – and equally a worrying thing for agents given manuscript prices are usually driven higher by bidding wars between the Big 6.
I don’t know why, but my gut reaction to this news wasn’t to hit the panic button, like it was for the Book Depository and Amazon merger/takeover. Maybe I don’t believe it will go through. Or maybe I think that a publishing house with 25% of the market won’t stay that way forever, or that in fact market share (a metric that so relies on a publishing house producing quantity rather than quality) doesn’t preclude other publishing houses from doing a stirling job.
Something I’ve seen spoken about quite a bit is that their size would given them better ‘negotiating power’ with Amazon, and also the potential to ‘increase direct-to-consumer efforts beyond the struggling Bookish’. These are two things that I disagree with. First: I don’t think priority one for a publishing house in a state of fluctuation, where authors and staff aren’t sure where they stand (which is what this would create), is to screw up a relationship with the biggest online retailer for books. In fact, I’d say it’s not even priority six or seven.
Second: the combined digital infrastructure of the two houses probably doesn’t give them any more of an edge than they have separately in direct to consumer efforts. Chances are, they’re probably already doing the same thing in separate houses – to make direct-to-consumer selling successful you have to have so much more than a cash injection and a solid warehouse. As The Telegraph’s Sameer Rahim said ‘the author is the brand, not the publisher’. The combined brands of Random House and Penguin are still no match for Amazon, and that brand is the key to online D2C efforts.
I’d really like it if there was one conversation in the industry at the moment that wasn’t about Amazon. Because there’s another consideration, and it’s called the reader. Monopolies of any kind do not help them, so this fabled situation where the one big publisher goes up against the one big online retailer is sort of missing the point unless you’re an independent bookstore, or someone who can significantly benefit from Amazon’s destruction.
The important thing to remember is that if this merger were to go ahead it wouldn’t create a monopoly in the publishing industry. Recent high-profile acquisitions have shown how size isn’t the most important thing in selecting a publisher – authors will trust a specific publisher with a book for so many varied and personal reasons that it’s impossible to say that this one big one will suck up all the talent. The diversity of publishers, lists and authors will be as strong as ever.