Random House and Penguin have signed an agreement to combine the two companies, forming Penguin Random House, though such a merger is subject to government approval before it can be finalized. If all goes well, the merger will be complete by late 2013.
Under the terms of the agreement, Random House parent company Bertselmann would own 53% of the venture, and Penguin parent Pearson would own 47%. Random House CEO Markus Dohle would be CEO of the new entity as well, with Penguin Group Chairman John Makinson as chairman. Neither parent company could sell any part of their interest in Penguin Random House for three years, and there are protections in place for Penguin as the minority shareholder. The combined company would have yearly global revenue in the range of $4 billion.
Pearson CEO Marjorie Scardino says, “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.”
Random House CEO Markus Dohle wrote a letter to employees assuring them that “my commitment to you and our new colleagues is to retain the distinct identities of both companies’ imprints, where authors remain the center of everything we do. Authors and their agents will continue to enjoy an enormous choice of publishing homes, where creative autonomy and great resources will be a defining hallmark.”
Penguin chairman Makinson made a similar point to his employees: “I have no doubt that some authors, agents, and customers will express concern to many of us that this merger will reduce choice and competition. I believe, and so I know does Markus, that exactly the opposite will happen…. The publishing imprints of the two companies will remain as they are today, competing for the very best authors and the very best books. But our access to investment resources will also allow Penguin Random House to take risks with new authors, to defend our creative and editorial independence, to publish the broadest range of books on the planet, and to do it all with the attention to quality that has always characterized both Penguin and Random House.”
For more, see the story in Publishers Weekly.