Media: Random House and Penguin to merge
Two book publishers are joining forces to “get stronger,” and their union will reshuffle the industry, said Eric Pfanner and Amy Chozick in The New York Times. Random House and Penguin announced this week that they will merge to become the world’s largest publisher, accounting for about one in every four books sold. The deal is designed to give the two publishers greater scale to deal with the challenges of e-books and the growing power of Internet retailers like Amazon. Consolidation in the industry is inevitable, said Penguin CEO John Makinson, and “we decided it was better to get in early rather than be a follower.”
Publishing is now dominated by just six major companies, said Mark Sweney in The Guardian (U.K.). The combination of two of them, with catalogs that span from The Brothers Karamazov to Fifty Shades of Grey, could give the new Penguin Random House more heft in negotiating prices with retailers. The news “unsettled some in the industry,” awakening fears that fewer risks will be taken on lesser-known authors. But the deal could “leave more room for smaller, nimble players,” said Andrew Franklin, founder of Profile Books. “The myth is when you combine two great companies you get one even greater company.”
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Entertainment: Mickey and Darth Vader join forces
In a “surprise deal,” Walt Disney will purchase Lucasfilm, the maker of the Star Wars movies, for more than $4 billion, said Ben Fritz in the Los Angeles Times. The deal gives Disney control of the lucrative Star Wars franchise, which it will promote through its theme parks and consumer products, as well as ownership of companies like special-effects firm Industrial Light & Magic. For George Lucas fans, the “most stunning” part of this week’s announcement is Disney’s intention to create a new series of Star Wars movies, with the first to be released in 2015.
Companies: Apple ousts maps executive
A veteran Apple executive was asked to leave the company this week, in the most sweeping C-suite changes since Steve Jobs’s death, said Jessica E. Lessin in The Wall Street Journal. Scott Forstall, who oversaw Apple’s mobile software, refused to sign a letter apologizing to customers for flaws in Apple’s new mapping service. It was the last straw for CEO Tim Cook, since Forstall had clashed with other senior executives for years. John Browett, Apple’s retail chief for the past seven months, was also asked to leave, over unrelated issues.
Banking: UBS to cut 10,000 jobs
In a major overhaul, Swiss bank UBS plans to cut 16 percent of its workforce by 2015, said Katharina Bart in Reuters.com. The bank will cut 10,000 jobs and abandon its fixed-income business, narrowing its focus to wealth management for rich clients as part of a broad cost-cutting plan. The bank, which lost $2.3 billion in the last quarter, has been struggling to deal with the fallout of the European debt crisis. Some layoffs have already begun: Traders in London realized they’d been fired when their building passes were abruptly deactivated.
Fraud: U.S. sues BofA over mortgages
The U.S. government accused Bank of America last week of “brazen” fraud for selling bad mortgage loans to Fannie Mae and Freddie Mac in the run-up to the housing bust, said David Glovin and Hugh Son in Bloomberg.com. The bank and its Countrywide Financial unit saddled taxpayers with major losses by churning out mortgage loans without adequate quality controls, the government alleged. The bank then sold the flawed loans to the government’s mortgage finance firms. The government is seeking $1 billion in damages to defray the costs of the 2008 bailout of Fannie and Freddie.
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