This is a good backgrounder from the Wall Street Journal on the proposed Penguin/Random House merger. (There's also a follow-on here. Nothing about News Corp. coming back with a vengeance, but I'm not counting them out!)
Some interesting details: The talks began just a few weeks after the Justice Department filed its antitrust suit against Penguin and others. The companies could save costs by closing warehouses, so there are some economies of scale to be had. They're hoping that the deal could close by the end of next year, and Pearson doesn't want to sell Penguin because it would take a tax hit. And an unnamed publishing executive at an unnamed house said that e-books now account for 30%-50% of fiction sales, so any suggestion that e-books aren't such a big deal these days needs to be taken with a very large grain of salt.
So far, so good, but read on down and things start to get weird:
[Random House Chief Executive Markus] Dohle said the two companies were just starting to analyze the potential cost savings, including those in distribution, warehousing and information technology. But "this deal isn't based on synergies; it is based on future growth," he said.
[Penguin Chief Executive John] Makinson said the merger will allow the companies to invest more heavily in social media and other new technologies. With fewer traditional bookstores around, he said, "it becomes harder and riskier to take a chance on new writers because you can't be sure of finding an audience." Social media can help remedy that.
Wow. There's not a thing there that makes sense to me. They're merging so that they can Tweet better? I mean crazy me, I thought the purpose of merging was to cut expenses by consolidating operations, but according to them they haven't really thought that part through, except to decide that they aren't cutting any imprints. (Penguin not thinking things through seems to be a theme lately.) And what's this vague "other new technologies"? Don't they know that Calibre is free?
The end of the article spirals down into absurdist humor, including a quote from (you guessed it) Scott Turow, and a note that this joint venture could go public in five years! Sure! That'll happen!