Trade responds to "scary" merger talks

Trade responds to "scary" merger talks

Leading publishing figures have described the merger talks between Penguin and Random House as "scary" and a case of "tectonic plates shifting", expressing fears that the move could lead to a lack of diversity in the market.

Most saw the move as a reaction to the power of companies such as Amazon, Apple and Google and some also questioned whether the merger would be allowed to go ahead by the Competition Commission.  

Agent Clare Alexander of Aitken Alexander said: "From an agent and author point of view when there is a loss of diversity in the market, it is potentially very scary. The problem for publishing is the size of Amazon, and the combined strength of Random House and Penguin is an answer to that. Penguin has the best name in publishing and I think it is a sleeping giant in terms of using its brand . . . I think if I were Random House I would recognise that as gold and the combination of the two in terms of direct selling to consumers is more than double their strength."

She added: "My guess is it is an answer to the size of Amazon and it is about selling direct to the consumer . . . It is tectonic plates moving, this huge thing, and although it scares me, I think both companies are run by clever people aware of the dangers.

"The important thing is that they unite when they are consumer facing, but stay diverse in their publishing, by which I mean don't lose imprints. We want there to be a Transworld, a Hutchinson, a Michael Joseph, a Cape. They are precious these imprints."

Peter Straus, agent at RCW and president of the Association of Authors' Agents, said: "They are reacting to the growth of Amazon, Apple and Google becoming bigger corporations. The more collateral they have, the more power they will have in the market. It underlines the fact that content is king, both have extremely good content and excellent authors. This can only be a good thing for their authors if they continue to treat them with the same care and attention as they have before."

However, other agents expressed concern over the move's potential implications for authors. Blake Friedmann's Carole Blake said: "I think it's more than sad. It's scary. The larger the publishing company, the more corporate their policies become and the more difficult it is dealing with them. Contract negotiations become more and more surreal, and take longer and longer. And an author becomes an even tinier speck on the publisher's horizon." She added: "I do feel rather sad for Penguin though if Pearson are ceasing to back trade publishing."

Similarly, agent Darley Anderson said a change in ownership could be best for Penguin as Pearson is "clearly now not" committed to trade publishing. United Agents' Robert Kirby said: "This seems to me not about authors, but about companies surviving in the tough climate. I think authors have been feeling this-it's 10 times worse than a pinch-for the last 10 years. Publishers only survive because authors grant them the rights to publish their books, and the element which has the biggest question mark over it is what does this mean for authors?"

He added that it seemed to be a continuation of the first wave of significant trade publishing mergers that happened in the 1980s, and said when similar mergers happened in the music industry, the “beady eyes” of the Competition Commission looked closely at the deals. 

Waterstones m.d. James Daunt is also reported in the Times as saying that the two publishers occupy similar territory in literary fiction, but said: "The competitive nature of the industry means it shouldn't be compromised by this."

Independent publishers also saw the move as a way for the publishers to compete with Amazon, and that it will meanwhile leave indies with further opportunities to be "nimble" and contract authors that are overlooked by larger houses. Gallic Books m.d. Jane Aiken said: "I was surprised by the news but on reflection, I don't think it will be a bad thing for the trade. The new bigger group will have a lot of clout, perhaps they will take on Amazon? And it will still leave independent publishers to be nimble and pick up authors who are overlooked by the large houses." 

Oneworld m.d. Juliet Mabey said: "I don't think the merger will affect the indies as much as the other four big publishers, and we could well see further mergers as they assess their ability to compete in a rapidly evolving market. More importantly, it could prove a game changer in relation to Amazon."

Meanwhile, Toby Bourne, group buying and marketing director at distributor Bertrams said: "It is a period of change in global publishing and I’m sure both parties have good reason to enter into these discussions. Both have significant brand heritage, which are recognisable to readers around the world."

Kirby added: "At this moment in time, everything is up for sale, and it's a matter of price and of making strategic alliances. Because the market conditions are so tough and there are big boys our there like Amazon with huge market share, in order to cope there is this process of becoming bigger and more powerful."