Book companies join forces to boost the power of the word

Penguin owner Pearson completed a joint venture with Random House owner Bertelsmann to create Penguin Random House.

The merger combines two of the ‘big six’ publishers in a venture behind 15,000 new titles a year.

It bolsters the companies in the face of a changing market – driven by the rise of the ebook from the likes of Amazon, Apple and Google.

The deal overcame regulatory hurdles including a competition probe by the United States Department of Justice after it was announced in October.

Penguin Random House employs more than 10,000 staff and spans the globe with operations in the US, Canada, the UK, India, South Africa, Australia, New Zealand, China, Spain and Latin America.

It is home to writers as diverse as Jack Reacher creator Lee Child at Random House and Penguin’s long list of classical authors such as Charles Dickens and Jane Austen.

John Fallon, chief executive of Pearson, said: “This combination creates a clear world leader with a strong platform for continued creative and commercial success in a rapidly-changing consumer publishing industry.

“This will be an excellent business and we will be active long-term partners in it.”

Thomas Rabe, chairman and chief executive of Bertelsmann, said: “With today’s launch of Penguin Random House, Bertelsmann and Pearson have set a great course for the future of the book, and book publishing – and new growth for Bertels-mann.

“Together, we can and will invest on a much larger scale than separately in diverse content, author development and support, the publishing talent, the entire spectrum of physical and digital book acquisitions, production, marketing, and distribution, and also in fast-growing markets of the future.”

Markus Dohle, former chairman and chief executive of Random House, now heads the joint venture as chief executive.

John Makinson, former chairman and chief executive of Penguin, becomes chair- man.

Bertelsmann owns 53 per cent of the joint venture and Pearson 47 per cent.

The combined company has revenues of £2.6bn and operating profits of £346m.

The other major publishers are HarperCollins, Hachette, Simon & Schuster and Macmillan.