The Korea Herald

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[Newsmaker] Mega publishers merge to fight e-books

By Korea Herald

Published : April 7, 2013 - 19:54

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What do George Orwell’s “1984” and E.L. James’ “Fifty Shades of Grey” have in common? Starting later on in 2013, they’ll both be owned by the same company after a merger is completed between publishing heavyweights Penguin and Random House.

The two have received unconditional approval from several regulatory commissions on competition in the U.S., Canada, Australia and New Zealand, with the latest coming from the European Union on Saturday. 
A display of books published by the Penguin publishing house, part of Pearson Plc, is seen at a bookstore in London on Friday. (Bloomberg) A display of books published by the Penguin publishing house, part of Pearson Plc, is seen at a bookstore in London on Friday. (Bloomberg)

The merger does not “raise competition concerns, in particular because the merged entity will continue to face several strong competitors,” according to the EU Commission in a statement.

Upon completion, the two will form Penguin Random House, the largest publisher in the world with a 26 percent global market share. Penguin’s parent company, Britain’s Pearson PLC media group, and Germany’s Bertelsmann SE, the parent company of Random House, will split the company at 47 percent and 53 percent, respectively.

Observers say that the move is significant and could start a trend with other major publishers looking to combine.

They said it was “inevitable,” according to the BBC, as firms struggle to stay afloat amid the ever-increasing e-book market and growing competition with newest e-book competitor, Amazon.com, and its aggressive price-cutting on e-books.

According to the publishing houses’ parent companies, both have agreed to try and keep their imprints, or subsidiary publishing brands, independent.

Also, the merger will save both companies money, allow for more resources for investment and help nurture adventurous forays into new business models. Their combined annual revenue will stand at about $3.8 billion.

The business world, however, is watching to see if any other members of the “big six” publishers ― Hatchette, HarperCollins, Macmillan and Simon & Schuster ― will decide to merge in order to up the competition.

By Emma Kalka (ekalka@heraldcorp.com)