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Penguin and Random House officially close merger to become Penguin Random House

Penguin and Random House officially close merger to become Penguin Random House

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David-Shanks-Penguin

The Big Six publishers have officially become the Big Five as Random House and Penguin completed a merger this morning. In a statement today, the two companies announced a new group known as Penguin Random House. The new company will include almost every part of both Random House and Penguin, creating a company with over 10,000 employees across five continents.

As mentioned before, ownership of the new company will be split between the two companies' parent entities, Pearson and Bertelsmann, and the new company will publish across a total of roughly 250 imprints. Random House's Markus Dohle will step up as CEO, while Penguin's David Shanks will step down and serve instead as a senior executive advisor to Dohle.

The Big Six become the Big Five

Random House and Penguin's merger was announced as Penguin fought allegations that it had colluded with Apple and others to fix prices — Random House, in fact, was the only one of the Big Six not implicated in a wide-reaching Justice Department investigation. At the time, it seemed possible that regulators would look askance at a deal that would further consolidate power in an industry allegedly plagued by anti-competitive behavior. But the Department of Justice cleared the merger on Valentine's Day of 2012, imposing no conditions on the pair.

Nonetheless, as Forbes notes, the new company will still have to abide by the terms laid out in a $75 million price-fixing settlement from last year. Among other things, that means that it can't enter into new agreements with Apple or others that limit sales or promotion pricing for the next two years. For the next five years, it can't offer "most favored nation" clauses that guarantee a company the lowest price offered to any retailer. However, the merger itself was designed to help Penguin Random House boost its clout against Amazon and other retailers by sharing costs and wielding the combined influence of two major companies.