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article imagePenguin Books and Random House in new venture

By Tim Sandle     Oct 29, 2012 in Business
The publisher of the world famous Penguin books (Pearson) has entered into a deal with the German media group Bertelsmann, who publish the Random House imprint. The deal will create a new global player in the book market.
The joint venture will lead to a new publishing arm, which is to be called Penguin Random House. The news comes ahead of a potential bid, as the Financial Times indicates, for Penguin by News Corp’s book arm HarperCollins.
In terms of ownership, the BBC notes, Bertelsmann will own 53% of the joint venture and Pearson will own 47%. The new chairman will be John Makinson, who currently runs Penguin books. The company will be based in London at Penguin’s current headquarters.
Earlier in the year, the Digital Journal reported that Pearson, the company which owns the company Penguin books, has purchased the self-publishing company Author Solutions Inc. in a multimillion dollar deal.
Pearson's chief executive, Marjorie Scardino, is quoted by The Guardian as saying: "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."
The reason for the merger reflects the changing landscape for book publishing, a response to the dominance of Amazon, the rise of the e-book and the decline of the shopping mall book shop. The merger will create economies of scale and allow the companies to develop the e-book market.
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