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Friday, October 26, 2012

Random House Merger Talks Could Signal Massive Publishing Changes



When I first began this blog one and a half years ago – and nearly 500 posts ago – I lamented the changes that were taking place in book publishing.  We had just witnessed the shuttering of the final Borders bookstore outlet and the Great Recession was teaming up with a digital revolution to transform the book publishing industry.  Today we are about to see the next phase:  publisher consolidation.

Random House, the nation’s largest book publisher, is in serious merger talks with Penguin.  The rumor was spread by the Financial Times, a paper owned by the same London-based company that owns Penguin, (Pearson).  Bertelsmann, the German-based media conglomerate, owns Random House.

Such a merger means:

  • Less competition in the marketplace of literary agents selling the works of authors and thus, smaller advances and fever bidding wars are to come

  • Layoffs at both publishers, where duplication exists, but could mean a cost-savings to the combined operation.

  • There will be more mergers.

  • RH-Penguin could be big and strong enough to compete without Amazon and form its own online store.

  • There is more uncertainty in the industry.

The book world soon could be left with fewer book publishers, just as it’s been left with fewer book stores.  After the next three to five years bears witness to what I believe could be merger mania amongst publishers, you will see a marketplace that will consist of competing business models.

The self-publishing industry continues to grow by leaps and bounds.  What could conceivably happen is that major distributors of self-published books will be elevated competitors to the shrinking of traditional publishers and/or some of the publishers will buy up the self-publish distributors so they can capitalize on the success of the fast-growing segment.

Another trend appears that foreigners will continue to buy up U.S. publishers.  UK’s Rupert Murdoch owns Harper Collins.  The French own Hachette and what was The Time Warner Book Group.  Who’s next?

Lastly, not only is there consolidation ahead for book publishers, but also for the news media – TV, radio, newspapers, and magazines.  Some of the media will merge with book publishers, the way ABC-Disney, CBS-Simon & Schuster, and Fox-Harper have.

And if Barnes & Noble’s stores continue to struggle and see shrinking paper book sales, we will see the loss of the last great book chain.  E-books will then reach a tipping point and by 2030 – when my daughter graduates college – printed books will be in antique shops and memorabilia shows.

But through all of these changes, one thing will hold true.  Content will be written, published, and sold at a level that exceeds today’s marketplace.  Venues will change.  Shifts in the market will continually create new winners and losers but we will always have a vibrant publishing world – whatever form it takes. 

Brian Feinblum’s views, opinions, and ideas expressed in this blog are his alone and not that of his employer, the nation’s largest book promoter. You can follow him on Twitter @theprexpert and email him at brianfeinblum@gmail.com. He feels more important when discussed in the third-person.

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