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Penguin and Random House: Will they combine to form the world's biggest publisher?

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A merger could reinvigorate the companies and make them more competitive in a changing industry, an industry executive told the WSJ. “A merger would allow the two companies to cut costs while giving the new company more clout to stand up to retailers like Amazon and more resources to compete internationally," said one industry executive.

It would also follow analyst predictions of consolidation among the “big six” publishers, a probable move “in an industry where independent bookstores are giving way to national chains and large technology companies who control e-book stores,” writes the Financial Times.

“Consolidation is the order of the day, and technology and tablet computers have given it extra momentum,” Lorna Tilbian, head media analyst at Numis, told the UK’s Guardian. “They [publishers] have got to gang together to have enough clout to take on the technology giants that have transformed the industry. I can see a world where Apple, Amazon and Google become the 21st century equivalent of Time Warner, News Corp and Walt Disney, but they won't [just] be running the technology and content, but also distribution.”

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