Strategy: The Big Merge

Norris emphasizes that he hopes the new entity will be successful, but qualifies that he'll be measuring that success against a different yardstick than shareholders will: "on the extent that they can get more people who don't buy books to buy one book. Simba estimates over 100 million adults didn't buy a single, solitary book in the last 12 months, and everyone in the industry needs to start figuring out how to make content worth the wait instead of simply shortening the distance between the voracious reader and the cash register."

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The Pragmatist

Michael Cairns

Chief Revenue Officer

SharedBook

According to industry vet Michael Cairns, there will, of course, be big operational challenges in maintaining the business momentum on both sides. "But most of the execs are going to know that," says Cairns. "I suspect many have gone through something like this before."

Cairns, who was on hand for the merger that formed Price­Waterhouse­Coopers in 1998, figures this deal will go down relatively smoothly.

"Pearson and Random House have been talking about this for a while. They've been intellectualizing it for a lot longer than Simon & Schuster and HarperCollins [have] should they end up together," says Cairns, referring to reported preliminary merger talks between two more of publishing's titans.

Why are mergers and acquisitions on everyone's minds?

"I think because they believe scale is going to be the only way that they can really compete," figures Cairns. "They need to extract more revenue out of their assets, and by combining operations, they'll be able to push more content and more physical units through their operations."

Cairns cites physical properties, such as warehouses. "We know volumes in physical books are declining. They need to fill up that space with something, and it would be good if they could find other books. They'll be in a position where they'll have much greater volume and get more value out of the assets that they already own.