New Delhi, Oct 30: The decision by two of Europe’s largest publishing houses, Bertelsmann and Pearson to merge their popular units Random House and Penguin for a bigger slice of the publishing largesse has sounded a note of caution among Indian publishers, who are waiting for the deal to reveal itself.
A section of leading publishing houses in the country feel that it could set in a wave of mergers of small and big players in the industry at the domestic level.
The trend had begun showing on a smaller scale few years ago with publishing houses like Zubaan, Yatra Books and Westland Tranquebar Ltd tying up with bigger publishers for a wider distribution footprint. Rupa
& Co, a mass market fiction leader in India, tied up with former Penguin CEOs David Davidar and Ravi Singh to set up Aleph Book Company, a literary fiction imprint which uses Rupa’s resources.
It is too early to comment on the Penguin-Random Houser merger, says Kapish Mehra, publisher of Rupa & Co.
“Let us see how the merger unfolds. I don’t think the situation will change much on the ground,” Mehra told IANS.
Sobhit Arya of Wisdom Tree, a leading publisher of Indian non-fiction and homegrown fiction, said the coming together of the two Goliaths will give them greater muscle.
“A big entity like the Penguin-Random House will use its muscle to offer more money to source content and rope in leading authors. It will also offer margins to get sales. If a publishing house has a deep pocket, it can allow large margins (discount in sales) to weed
the competition out,” Arya told IANS.
It is already happening in India. All the multinational publishing houses are throwing their books at a greater discount than the industry prices here for a greater period of sustainability, he said.
All the multinationals publish thousands of books every year and use countries like India as a kind of dumping ground , Arya said.
“We are facing an alarming state. In the next couple of years, small and independent publishers would have to join larger organisations,” the publisher of Wisdom Tree said.
Announcing the impending merger, the publishers said the combined entity would have a global market share of 25 percent and a list that would boast of best-sellers like the Random House’s “Fifty Shades of Grey” trilogy and Penguin classic series. Reports in London said
Bertelsmann, which owns Random House, would control 53 per cent of the combined entity and Pearson 47 per cent.
The combined entity is expected to generate an annual revenue of $3.8 billion. Sources in the industry said the merger was meant to take on challenges arising from the growth of e-books and Internet retailers like Amazon.com.
In India where the publishers have large stakes, it could see an increase in asking rates for good manuscripts and aggressive business, a publishing trade analyst said. According to figure cited by the
Business Standard, a leading business publication, the Indian book publishing industry is currently pegged at Rs 10,000 crore.
Daniel Watts, regional director of Pan Macmillan said in the short term, he would expect some disruption as Penguin and Random House work out the details of how they are collaborate. “A consolidation of size will trigger fallout from different aspects of their businesses. This could provide a good opportunity for smaller publishers. It per se won’t trigger fresh mergers, but industry consolidation and the shift to digital may trigger further mergers as all publishers are re-thinking their business models for some time,” Watts said.
The regional director of Pan Macmillan said “publishers in India will become less aggressive and more fiscally conservative.”
“At present the market cannot sustain the volume of new books being published every month. The industry is seeking more innovate and profitable ways of publishing,” Watts said.
The merger will have a positive and negative impact on the publishing industry, said K.P.R. Nair, managing director of Konark Publishers Pvt Ltd, a leading publisher of Indian non-fiction and fiction titles.
“The number of Indian authors will increase. More and more Indian authors will be encouraged to publish in India and use the platform to be published worldwide,” Nair told IANS.
The competition will be tough for the multinational publishing houses, he said.
In the Indian environment, for those in the publishing trade, it will mean one bidder less for the big authors, Rajiv Beri, managing director of Bloomsbury Publishing.