Publishing as usual — for now

Pearson and Bertelsmann went public on Monday with their agreement to combine Penguin (Pearson) and Random House (Bertelsmann) to form the world’s biggest consumer publisher.

In a detailed two-page press release, Penguin outlined what would happen on the macro-level if the move is approved by regulatory authorities, beginning in the United States. The release said that customary regulatory and other approvals, including merger control clearances, were expected to be completed in the second half of 2013.

Details of the agreement include that the joint venture will be named Penguin Random House, 53% owned by Bertelsmann and 47% by Pearson. Bertelsmann will nominate five directors to the board and Pearson four. John Makinson, chairperson and chief executive of Penguin, will be chairperson of Penguin Random House and Markus Dohle, chief executive of Random House, will be chief executive.

So much for the broad outlines of the new entity, which seems to be a given, if the nod to Universal Music to acquire EMI set a precedent (See “Supermerger sparks concern”). Some of the objections raised in that case apply to this too, such as the merged company dominating the market, leaving authors — and readers — with less choice.

Not so, says the Penguin press statement. Rather, it contends, “readers will have access to a wider and more diverse range of front-list and back-list content in multiple print and digital formats. Authors will gain a greater depth and breadth of service, from traditional front-list publishing to innovative self-publishing, on a global basis.”


Writing on Forbes.com, Jeremy Greenfield dissented, noting: “But the larger Penguin Random House might have the negotiating power to squeeze better terms from agents and authors in exchange for unmatched marketing and distribution resources. (‘If you sign with us, you’ll sell more copies in more countries and make more money,’ they might be able to say.)”

All these hypotheses lie in the future — and a somewhat distant one at that for Penguin and Random House in South Africa. Steve Connelly, managing director of Random House Struik,the company’s South African arm, says it is “too early to frame how things will work in South Africa”.  Assuming the combination is approved, he says that “rolling out the merger in the US and the United Kingdom will begin only in 2014. Thereafter, it will be the turn of overseas companies — Australia, South Africa … I can’t see any real impact here until 2014.”

Random House Struik is itself the product of a merger similar in intent to the Random House and Penguin plan. In August 2008, Random House South Africa and Struik Publishers merged to create a new African book publishing company.

For now, says Connelly, “it’s business as usual, competing with Penguin”. He notes that the competition authorities here will have to look at the proposed combination and so it is “premature to speculate” about how the move will affect the respective companies, their staff and publishing policies.

He is emphatic that “I don’t see any loss of editorial independence on either side”, pointing to Random House — a behemoth of imprints that is home to many formerly independent publishing houses — as a natural operating model.

Until the hurdles are cleared, however, everything is “pure speculation. It is very exciting potentially, but we are at the earliest stage and we have to stay focused on our business.”

Frederik de Jager, publisher at Penguin Books South Africa, is as circumspect. “It is impossible at this stage to say what shape the new company will take.”

He is as confident as Connelly that a “strong guiding principle is that editorial independence is sacrosanct” and that “for us, for the time being, it is absolutely business as usual”.

De Jager is uniquely qualified to talk about how a combined South African operation might work: he was the publisher at Umuzi, Random House Struik’s South African fiction imprint, before moving to Penguin. He says that “my experience of both companies confirms that they are an extremely good fit; they share core values in publishing”.

Come late 2014, or perhaps early 2015, Penguin Books South Africa and Random House Struik will most likely be discussing the niceties and practicalities resulting from this week’s announcement of the Penguin Random House idea.

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Darryl Accone
Darryl Accone has been in journalism for the best part of four decades. He is also a Fellow of the Salzburg Seminar and the International Writers Workshop of Hong Kong Baptist University and the author of ‘All Under Heaven: The Story of a Chinese Family in South Africa’ and ‘Euripides Must Die’.

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