Penguin House? Random Bird? Rumors of Random/Penguin Discussions Confirmed

The bookworld has been atwitter today with chatter that publishing giants Random House and Penguin have been discussing a merger. As of Thursday afternoon, we have confirmation from the source that the talks, at least, are true. Earlier today, Pearson issued the following statement:

Pearson confirms that it is discussing with Bertelsmann a possible combination of Penguin and Random House. The two companies have not reached agreement and there is no certainty that the discussions will lead to a transaction. A further announcement will be made if and when appropriate.

Publishers Weekly, always ready with book-related numbers, gives us a taste of what such a merger might mean:

If a deal does go through, it will unite the two largest trade houses in the U.S., including the two dominant publishers of mass market paperbacks. In 2011, Random House had worldwide revenue of 1.75 billion euros ($2.2 billion at current exchange rates) while Penguin Group had total sales of 1.04 billion pounds ($1.70 billion at current rates). Their combined American operations would have sales of about $1.8 billion, giving Random House Penguin about a 16% share of the trade market based on BookStats industry estimates of trade sales of just under $12.5 billion (excluding religion). With that type of market share, it would be difficult for Amazon, or any other online retailer, to turn off buy buttons if they disagreed over some business decision, one analyst noted. The combination would also have enough financial heft to increase direct-to-consumer efforts beyond the struggling Bookish. Others see this as a move to plug some holes in both companies' worldwide operations, although both publishers have well-established businesses in the major English-language countries.

You can see all of the Publishers Weekly piece here. Quill & Quire comments here.