Almost a year to the day TIPM produced and posted an article and infographic to illustrate the global media corporations which control the so-called ‘big five’ publishers and the involvement major publishing houses now have in self-publishing service providers. You can still download this infographic here. One of those global corporations is Bertelsmann, current co-owners (with Pearson) of Penguin Random House (PHR) or as we sometimes affectionately call it — the Randy Penguin! Both publishers merged in 2012 to create by far the biggest publisher in the world. Amazon’s growing dominance in the retail market clearly was one factor on that deal going ahead.
For a global media corporation, German-based Bertelsmann remains a privately held company (80.9 percent of the capital shares in Bertelsmann SE & Co. KGaA are held indirectly by foundations — Bertelsmann Stiftung, Reinhard Mohn Stiftung, BVG-Stiftung — and 19.1 percent are held indirectly by the Mohn family). The company’s current CEO is Thomas Rabe, who spent some of the 1980s playing bass guitar in a Germany punk band. Rabe has since washed the green dye from his hair and cuts a more composed and reliable pair of hands in the corporate world.
Bertelsmann was founded in 1835, originally a publisher of Christian literature, it became the Germany military’s primary book supplier prior to WWII. The company became a general book publisher in the late 1940s and 50s when book clubs really began to take off, and since then it has developed multiple interests in TV production, music (BMG Music) and educational materials (book and online). It has continued to diversify and expand into digital but book publishing remains its core business. Bertelsmann has also been both a shrewd buyer and seller of companies over the years. It sold its 50% interest in AOL fifteen years ago (AOL today is the target of a buyout by US telecom giant Verizon) just before the dot-com era went flat, and more recently, in 2012, it purchased a 53% controlling stake as part of the Random House and Penguin merger with Pearson Plc.
Last Autumn, at the time of the Frankfurt Book Fair, Europe’s biggest book industry event, the rumour mill began spinning widely that Bertelsmann was positioning itself to take up an clause option in the 2012 deal with Pearson (after a period of three years) to extend its 53% share of PRH, with the possibility of a complete buyout. The spinning mill hasn’t slowed down this year, and if a Wall Street Journal (WSJ) article last week is accurate, then we can expect plans for a takeover to begin as early as October. CEO Thomas Rabe certainly seems to believe Pearson is willing to release its share stake.
Asked whether Bertelsmann is interested in taking full control of Penguin Random House, Mr. Rabe says that hinges first on what Pearson does. In October, Pearson will have the option to sell its stake, and Bertelsmann would then have the option of buying it. Bertelsmann hasn’t decided what to do, but says the book publishing business is doing very well, and that it seems sensible for Bertelsmann to take over the shares because publishing has been its core business for almost 200 years.
While I though at the start of the year there was a possibility the ‘big five’ might just progress to the ‘big four,’ this is nevertheless a sign that media corporations are embracing diversity while publishers continue to embrace consolidation. And more importantly, the year isn’t over yet by a long way.