Random House-Penguin merger gets go-ahead from Justice Department

The Justice Department has given the green light to Random House and Penguin for their proposed merger, they announced Friday. The department approved the proposed merger of the two major publishing companies “without conditions.”

In October, the companies confirmed that they had plans to merge into a single entity, Penguin Random House (Alas, not Penguin House or Random Penguin).

Random House is part of Bertelsmann Group, based in Germany; Penguin is part of Pearson, which is based in England. The proposed merger also has to cross the hurdle of the EU’s European Commission and other regulators before it can go forward.

If the merger goes as planned, Bertelsmann will own 53% of Penguin Random House and Pearson 47%. The companies expect the merger to be comepleted by years’ end.

The merger would reduce the number of major publishers from six to five. That would decrease competition when it comes to agents trying to find the right homes for their high-profile authors’ projects.

But many have speculated that the merger is designed to increase competition in another arena: bookselling. Amazon’s dominance in the online bookselling market has allowed it to set terms for publishers, who have had little recourse. Some think Penguin Random House might be large enough to shift the balance a little.

In fall 2012, Bloomberg reported that the combined revenues of Random House and Penguin would be in the neighborhood of $3 billion. Random House closed the year with a banner bottom line thanks to the eroticnovel “50 Shades of Grey” and its two sequels, which was a blockbuster both in print and as an e-book.

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