Random House and Penguin Are Negotiating a Merger

In an effort to stave off the challenge from online retailers in a rapidly changing market, two of the world’s largest book publishers, Random House and Penguin, are engaged in talks to combine their businesses.

Pearson, the British media conglomerate that owns Penguin, said that it was discussing a potential deal with Random House’s owner, Bertelsmann of Germany. The merger, if completed, would create a combined entity that would control nearly 25 percent of the United States book market and feature an elite roster of authors like Dan Brown, Toni Morrison and John Grisham of Random House and Junot Diaz and Patricia Cornwell of Penguin. The potential consolidation comes as traditional publishers try to compete with dominant technology companies like Amazon, Apple and Google that have gained power in the e-book market. Lower prices offered by retailers like Amazon have put pressure on publishers to adjust their digital book strategy at a time when brick-and-mortar stores have been disappearing. A deal could signal a move toward further consolidation among the major publishers, much the way the music industry realigned itself as it made the painful transition to the digital marketplace.