Random House Deal Has Them Talking

Norman Mailer and Muhammad Ali--who sparred playfully for the photographers--weren’t the only heavyweights at Random House’s recent gathering in Manhattan to celebrate publication of “The Time of Our Time,” a mammoth new Mailer collection.

S.I. Newhouse Jr., head of Random House and arguably the most influential figure in publishing, paid his respects but left as many were still arriving. And the man destined to be the most powerful in the book business went largely unrecognized by the celebrities and literary players.

Standing on the perimeter of the crowd was Peter Olson, who is poised to become chairman and chief executive officer of a much larger Random House Inc. when Bertelsmann A.G., the German media conglomerate that already owns the Bantam Doubleday Dell Publishing Group, completes its $1.3-billion purchase of Newhouse’s book-publishing empire in the summer.

The pending deal, announced in March and now undergoing scrutiny by the Federal Trade Commission, will create the largest English-language publishing operation in the world, encompassing Random House and its varied sister imprints (Alfred A. Knopf, Ballantine, Crown, Pantheon and Times Books), as well as Bantam, Doubleday, Dell and Broadway Books. Annual sales of the merged companies will begin at around $1.8 billion.

Besides Mailer, the roster of authors will include Michael Crichton, John Grisham, Toni Morrison, Maya Angelou, John Updike, Robert Ludlum, Gabriel Garcia Marquez, Anne Rice and Anna Quindlen.

How this development in the ongoing consolidation of American book publishing will play out is sure to be widely debated this weekend in Chicago at the industry’s annual rite of spring, BookExpo America, co-sponsored by the American Booksellers Assn. and the Assn. of American Publishers. The event draws booksellers, wholesalers, authors, literary agents--and publishers hoping to generate interest in their fall lists, which will include such titles as George Stephanopoulos’ “All Too Human” (Little, Brown) and Tom Wolfe’s “The Stoics’ Game” (Farrar, Straus).

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In response to Bertelsmann’s planned purchase of Random House, called “the shocker of the decade” by Publishers Weekly, the 7,000-member Authors Guild and the Assn. of Authors’ Representatives have filed objections with the Federal Trade Commission. The guild maintains that the deal would give Bertelsmann control of more than 36% of the so-called trade, or bookstore, market in the United States--more than three times what Bertelsmann estimates. “No single company should have this much control over authors’ expression or this much influence on our culture,” said guild president and author Letty Cottin Pogrebin.

Writers fear that consolidation of so many publishing outlets under the Random House umbrella will limit competition for manuscripts, as well as the size of advances paid. “It was wonderful to have Random House and Bantam Doubleday Dell competing with each other, but that won’t happen now,” said New York literary agent Elaine Koster, a former president of Dutton and New American Library. “Of all the owners who could have taken over Random House, Bertelsmann is a benign presence. Still, the merger alarms people.”

Hoping to allay such fears, Olson has said that Bertelsmann will preserve the autonomy and diversity of the many imprints and will not trim the number of books it publishes. Another question is how editors and publishers at Random House--believed to be only marginally profitable, yet known for spending more freely than most on author advances and marketing--will adapt to Bertelsmann accountability.

“Certainly consolidation hasn’t affected us in any appreciable, discernible way yet,” said Richard Klein, a co-owner of Book Revue, an independent store in Huntington, N.Y. “There’s a concern that books which are less sure to become financially profitable will not be published” and, with decision-making in fewer hands, that the industry will be less willing to take chances on unknown authors.

Klein does not share that concern because “there are thousands of publishers in this country and a lot of them are publishing literary books. . . . And the independent stores like ourselves--not the chains--are always willing to take chances on lesser-known writers.”

He and other independents see as a far greater threat to their fortunes--and to serious publishing--the need to compete with proliferating superstores such as Barnes & Noble and Borders.

In March, the American Booksellers Assn., acting on behalf of its California members, sued Barnes & Noble and Borders in U.S. District Court for the Northern District of California, alleging antitrust violations--namely, that the two chains solicit and receive from publishers secret discounts and other favors not given to independent shops.

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The independents are also watching with concern the swift growth of Internet bookselling: Later this year Bertelsmann plans to launch BooksOnline (a working title). The publisher will become the newest player in a literary cybermarket pioneered in 1995 by Seattle-based Amazon.com, which reported $148 million in sales last year. Borders (https://www.borders.com) and Barnes & Noble (https://www.barnesandnoble.com) are also major online sellers.

The prospect that customers can bypass Main Street via the Internet is particularly worrisome to local bookstores, given that last year--for the third year in a row--hard-cover sales fell, this time by 3.4%, to nearly $5.5 billion. Sales of mass-market paperbacks, the pocket-sized softcovers, dropped 7.8%, to $1.43 billion. Media saturation (cable TV, home video and the Internet) and loss of leisure time are believed to be factors.

Nevertheless, in releasing the downbeat sales figures earlier this year, author and former Congresswoman Pat Schroeder, who now heads the Assn. of American Publishers, said they reflected a transition period for the industry, as publishers studied new ways to address old problems. These include return of unsold books to publishers, often to make shelf room for new books. (The AAP reports that the average return rate last year for adult hardcovers was 36.3% of copies printed.)

For oversize softcovers (trade paperbacks), the return rate was 23.6%; for mass-market paperbacks, a hefty 46.4%.

* Paul D. Colford is a columnist for Newsday. His e-mail address is paul.colford@newsday.com. His column is published Thursdays.