Strategy: The Big Merge

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The Skeptic

Michael Norris

Senior Analyst

Simba Information

Some observers are more optimistic than others. Color Michael Norris less optimistic. "The only real innovative thing that may come out of this is the combined firm will have a lot more content to study, so they can better see what works and what doesn't with print and digital distribution," says Michael Norris, an astute observer of book buying trends in his role with Simba Information. "If they can combine easily and in a short time, that could be a good payoff."

Echoing Peter McCarthy's thoughts on the effort it will take talented people to work on organizational issues, Norris sees this as a potential stumbling block for two publishers he regards as quite innovative in their own right.

"I think this merger is high risk and low reward," says Norris. "The two companies have been very innovative by themselves in the digital space and combining them won't necessarily make them twice as innovative."

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As with any move like this, there's an opportunity cost among other risks. "The publishing business will continue to transform while Penguin Random House figures out who gets what title and who gets to lead," says Norris. "Not only will they have to hold onto their talent with both hands during the transition, but the industry may be different by the time they are fully integrated, and then they'll be playing catch-up."

As to why this is happening, Norris thinks the move was not born of a strategic need, but rather "because someone at either Pearson or Bertelsmann finally figured out that ebooks aren't going to step in and save the industry and wanted out of the consumer books business."