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Wednesday, October 31, 2012

NZ book industry split over publishing merger

Predictably, there is a lot of angst in the New Zealand book world

According to a Fairfax survey, the bookselling industry is divided over the benefits or drawbacks of the merger of Penguin and Random House, which is confidently expected to go ahead.

Here, the reports of the two houses are remarkably similar. Publisher and distributor Random House reported revenues of $24 million for the 2011 calendar year, and a profit of $2 million.

Erstwhile rival Penguin reported revenues of $36.5 million, with profits of $2.5 million.

Graham Beattie, former managing director of Penguin New Zealand, and now New Zealand's premier book blogger (see link to the right), said he doubted that the merger would be good for the publishing sector here. "I don't go for this big is beautiful thing," he said. He anticipates big job losses from the merger. Distribution could well be run from Penguin's outlet in Australia, rather than Random House's operation on Auckland's North Shore. "Instead of having two warehouses, they will have one. Instead of having two senior editors of fiction, they will have one."

On the other hand, Lincoln Gould, CEO of Booksellers New Zealand, thought the merger could lead to lower prices, benefiting the book-buying public. "We would hope there would be efficiency gains in the supply chain, which is based on an outdated modeal and means consumers in New Zealand are faced with high book prices compared with other countries," he said.

On the wider front, Jeremy Greenfield of Digital Book World asks, "What is the point of the merger?"

It just might be that a larger publishing company will have more leverage to negotiate with its largest trading partner, Amazon.

That said, the combined revenues of Penguin and Random House in 2011 were about $4 billion; in that same year, Amazon took in about $48 billion.

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