People in the book industry spent the ensuing days speculating about (among other things) whether a combined publishing company would be called "Random Penguin" or "Penguin House." The combined company will be called "Penguin Random House."

Bertelsmann will own 53 percent of the joint company and Pearson will own 47 percent. Bertelsmann will be able to nominate five directors to the Board of Penguin Random House; Pearson will nominate four. The joint venture will exclude Bertelsmann’s trade publishing business in Germany, and Pearson will retain  the rights to use the Penguin brand in education markets worldwide. Penguin Random House will control about a quarter of the U.S. and U.K. markets.

The merger is subject to customary regulatory and other approvals and is expected to complete in the second half of 2013.

Current chairman and CEO of Penguin, John Makinson,  will be chairman of Penguin Random House, and current Random House CEO Markus Dohle will be the CEO of the new joint company.

“All of us who work in book publishing experience every day the breathtaking pace of change in our industry," Mr. Makinson said in a statement. "The partnership that we are announcing today will position Penguin Random House at the forefront of that change."

“Our new company will bring together the publishing expertise, experience and skill sets of two of the world's most successful, enduring trade book publishers," said Mr. Dohle.

The talks, which could still fall apart, have focused on a merger that would give Bertlesmann more than a 50 percent stake in the mega-publishing company that would form. The two houses combined would control about a quarter of the US and UK markets.

The idea of consolidating publishing houses is not completely unexpected.

"Analysts have predicted consolidation among the “big six” market leaders of the relatively fragmented publishing industry for several years," writes the FT. Still, the move could drastically change the book industry.

Pearson released a statement this afternoon confirming that they are indeed engaged in discussions with Bertelsmann. Previously, the parent companies of both publishing house had declined to talk to the Financial Times. Incidentally, the FT is owned by Pearson.

Statement below:

Pearson notes recent media coverage regarding Penguin, its consumer publishing division, and Random House (part of Bertelsmann). Pearson confirms that it is discussing with Bertelsmann a possible combination of Penguin and Random House. The two companies have not reached agreement and there is no certainty that the discussions will lead to a transaction. A further announcement will be made if and when appropriate.

A single person clapped and, realizing they were all alone, stopped.

Mr. Shanks continued, “It exudes the grandeur of Gotham and the dazzle of the iconic Mad Men design gone modern.” Mr. Shanks cleared his throat. “It’s really amazing.”

Last Monday, a group (of “top hotel and publishing executives as well as media industry influencers,” per a press release) was gathered at a private party to celebrate the grand reopening of the gut-renovated hotel and the launch of its new partnership with Penguin Books.

Scheduled to coincide with Book Expo America, a massive publishing trade show that forces attendees to trudge all the way to 11th Ave., three evening readings and panels were to take place in the lobby.

These readings, called the Penguin Preview Series at the Round Table, will continue on a quarterly basis. Another aspect of the new partnership is the Night-table Reading promotion, in which books and galleys from Penguin’s recent releases will be distributed to hotel guests each night.

It’s all a concerted effort to reclaim the “rich literary history” (a phrase repeated ad nauseum through the night) of the hotel, where, during the 1920s, the Algonquin Round Table met for lunch to exchange jokes and barbs, where The New Yorker was born in 1925, and where Dorothy Parker said that thing about leading a horticulture (you can’t make her think).

Penguin authors abounded: Elizabeth Gilbert, Ron Chernow and Simon Doonan milled around, Rachel Dratch chatted with John Hodgman in another corner, and Andrew Ross Sorkin, who dropped by on the late side.

We asked Mr. Hodgman if a literary salon could be revived in this way. Can there be another Algonquin Round Table?

“Salon culture still exists, but it’s online now. Writers don’t need to get together in an actual place any more,” Mr. Hodgman mused. “Though writers would benefit from a meeting place, because there would be alcohol and table service. Writers love hotels because they are the living rooms they cannot afford themselves.”

Pulitzer Prize winner Junot Diaz responded to the same question with characteristic flourish, but no optimism. “An incubator for personalities supremely attuned to this socio-cultural moment—it would be a wonderful thing for human circuitry. But communities have diffused and moved into the thinnest splinters,” he said.

Marion Meade, biographer of Algonquin patron sinner Dorothy Parker, clutched a glass of white wine with both hands, and proudly gestured toward one of her books, displayed in a glass cabinet in the lobby.

When asked if the spirit of the place could be revived simply by hosting readings and stuffing a new novel next to the Bible in each bedside drawer, Ms. Meade replied with an acerbic pragmatism.

“They are probably the only hotel in New York that has this kind of literary history. If they don’t use it, they’re pretty stupid, and they’re not stupid. Whether they can keep it up with Penguin, who knows, but I give them credit for trying.”

What would Dorothy Parker think of this latest campaign to capitalize upon the hotel’s literary pedigree?

“She’d think it was bullshit,” came the answer.

Charney tell-all or a pack of lies?

Yesterday Gawker, Galley Cat and other sites reported that Ryan Holiday, the marketing strategist, got a major book deal for a tell-all about his clients, including American Apparel founder Dov Charney and writer and professional bigot Tucker Max. Called Confessions of a Media Hit Man, the book sold to Penguin's business imprint, Portfolio. "Major" usually implies it sold for at least $500,000. Well, we will save Mr. Holiday from confessing one aspect of his strategy. A book editor sent us a copy of Mr. Holiday's proposal, which contains the following tactical outline:

The Press Release
The press release announcing the sale of this book is the perfect opportunity to create a compelling yet fake spectacle about the book. Relying on the fact that blogs and media outlets simply take for granted whatever is stated in a release, we will state in the press release that the advance given for this book was a spectacular sum. Blogs covering publishing and media will instantly pick up on the fact that a first time author was paid such an exorbitant amount. Combined with Ryan's experience working with bestselling authors, this will immediately put the book on the radar of the media elites. That the information is all fake and part of a social experiment will be revealed later in the book itself—as evidence of the gullibility of the web and proof of concept.

You got them Mr. Holiday! Here's more about his plans:

Fake Leaked Chapters
Once the market is seeded with the "newsworthiness" of the project, we will begin a whisper campaign that Confessions of a Media Hit Man is actually a tell-all about tabloid targets Dov Charney and Tucker Max. This can be accomplished through a combination of anonymous and unnamed tips to gossip blogs with which Ryan already has relationships. Having created the impression that this book is both high profile—Implied by the dazzling advance—and full of insider secrets, we will leak entirely fabricated excerpts and chapters to various blogs claiming they were "too controversial" for the publisher to allow for publication. Again, this will be revealed later as proof of concept to the media outlet of our choice. The revelation will be a bombshell and cement Confessions of a Media Hit Man as a media sensation.

Zing! The headline at Gawker: "Tucker Max and Dov Charney, Together in a Single Book". And just in case the book comes out and Nick Denton and Business Insider get mentions in its pages, that is intentional too:

Court Attention At All Costs
In a nod to the hip hop tradition of up-and-coming rappers attacking bigger acts in mix tapes and seeing their profile raised by the inevitable response, Confessions of a Media Hit Man will use the sensitive egos of bloggers against themselves. Previous books in this category have leveled only vague and condescending criticism of blogs. Why would blogs bother to respond to that? How could they? This book levels direct charges and serious accusations of wrong doing. It names names. Those names make up some of the biggest and highly trafficked sites on the web: Politico, Jeff Jarvis, TechCrunch, Michael Arrington, Ariana Huffington, Mashable, Gawker, Business Insider, Nick Denton and others. Each one of these names will be surreptitiously notified of these embarrassing revelations in advance and baited into responding. So will their competitors. We can expect their angry reactions and protests to drive serious attention and awareness of the book. As PT Barnum would court negative reviews and manufacture his own scandals—any press was good press as long as it spelled his name right and gave the time and date of his show—this book launch will deliberately generate denunciations from the blogging elite.

Portfolio did not immediately reply to our request for comment, but one hazard of reporting book advances is that publishers and agents will almost never confirm the sum. Mr. Holiday's agent, Stephen Hanselman, seems to specialize in unabashed self-promoters: his biggest client is self-help guru Timothy Ferriss.

Kloske in action.

We usually don't watch book trailers but this one is kind of like an episode of Curb Your Enthusiasm and also stars Riverhead publisher Geoff Kloske! It also has the actor Timothy Hutton and the author Julie Klam, who has written a book about a dog called Love at First Bark. We didn't know that until the end of the trailer though.

Mr. Kloske has remarkable screen presence and really steals the scene away from Mr. Hutton. Maybe it's time for a reality show set in Penguin's offices?

Rolling Stone

Mr. Hastings' book is based on his Rolling Stone article "The Runaway General," which provoked President Obama into firing General Stanley McChrystal. In July, a spokesperson for Little, Brown announced that its "publication plans have been cancelled due to editorial differences." [Publishers Marketplace]

Is that a schoolyard status symbol these days?

Anyway, a few of the people posting seem to have missed the point that there's supposed to be a book or reference to a book somewhere in the photo. Right now we would cast our vote for the photo of a cat sniffing copies of Conservatives Without Conscience (published not by Penguin Classics but by Viking, a Penguin imprint) and The Basque History of the World (listed under Amazon as "Penguin (non-classic)"), but we might also vote for the one with Gravity's Rainbow. Pynchon vs. kitties -- please don't make us choose.

The words "New York Times bestseller" appear in the advertisements a total of four times. In some places the word "bestseller" appears in capital letters. In other places it's all lowercase.

Mr. Sorkin expects the ads to run for the rest of the day and maybe tomorrow. He added in an email to the Media Mob: "No employee discount!"

Related: Dealbook Rising: Journal's Ace Wall Street Reporter Susanne Craig Hops to The Times Business Desk

For a moment, Mr. Auster looked at the questioner blankly. “But it’s not a children’s book,” he said. Perhaps she had gotten confused, because the story is told from the perspective of a dog named Mr. Bones?

The woman insisted that she knew what she was talking about—that the book she was referring to was an adaptation, published with full illustrations and packaged as a kids’ book. Mr. Auster said it was the first he'd ever heard of such a thing.

Sherman Alexie, who was also on the panel, asked Mr. Auster if that’s what happens when you write 40 books. Smiling tentatively, Mr. Auster deferred to his literary agent, Carol Mann, who was seated a few rows away from the woman who’d brought the matter up. Ms. Mann indicated she was not aware of a Timbuktu for kids either, and promised to look into it. 

At that point, Picador publicist James Meader, who works on Mr. Auster's paperbacks, submitted in a somewhat sheepish tone that he had a copy of the book in his office, and would send one to him directly. Soon someone in the audience had Googled the book on her iPhone, and raised her hand to share her findings. "It has a gray fluffy dog on the cover looking over its shoulder," she reported.

Had Picador published a Paul Auster book without telling him or paying for the privilege? That’s kind of what it seemed like!

Asked for her reaction after the panel, Ms. Mann said only that she was astonished, and was looking forward to sorting it out.

But no. As Mr. Meader later explained to The Observer,  Picador had had nothing to do with the mysterious book, which had in fact been published by a small German company called Minedition. "It’s kind of a macabre idea for a children’s book," Mr. Meader said, "Because as you may know, the dog does commit suicide at the end."

In an interview today, Ms. Mann said she had gotten in touch with Minedition and that contracts and copies of the book—which is distributed by Penguin in the USA—are on their way to Ms. Mann’s office. Turns out a computer crash was to blame!

"It’s not really a big deal if that’s what you’re thinking," Ms. Mann said. "It was a labor of love by a German packager-publisher, and they came to us with illustrations and an abridgement and then they disappeared. We had looked at it—Paul completely forgot about it but he had seen it, we both had. Apparently this little company’s computer server went down and the computer crashed so all of our back and forth was lost."

"There’s absolutely no duplicity!" she clarified.

Oh, well.

What else could explain Susan Peterson Kennedy’s decision last week to allow three of the biggest imprints under her jurisdiction at Penguin Group USA to sign up books on the same exact topic in the span of just 48 hours?

That topic, of course, was the crisis on Wall Street—a crisis that apparently did not discourage Ms. Kennedy, Penguin’s president, from green-lighting an extraordinary shopping spree that left many in the industry scratching their heads and that is estimated to have cost the company more than $2 million.

About 700,000 of those simoleons are going to The New York Times’ financial reporter Andrew Ross Sorkin, who sold his book, a Woodward-style inside account of the meltdown on Wall Street called Too Big to Fail, to Viking on Thursday afternoon after an auction involving at least three other houses. That same afternoon, Mr. Sorkin’s neighbor in the Times newsroom, Joe Nocera, together with Vanity Fair contributing editor Bethany McLean, sold a book on the banking crisis to Penguin’s business imprint, Portfolio, for what several sources said was a few bits north of a million dollars.

And the day before, Ann Godoff at the Penguin Press announced that New York Times Magazine contributor Roger Lowenstein, whom she has been publishing for years, had signed on to write a book called Six Days That Shook the World, which would chronicle the week when Lehman Brothers declared bankruptcy, Merrill Lynch sold itself to Bank of America and insurance giant AIG was bailed out by the federal government.

How will Penguin publish three titles that will so obviously compete for the same readers? More to the point, does Ms. Kennedy really think the demand for these books will be high enough that each of them will sell well enough to justify the amount of money Penguin shelled out for all of them? Is this as safe an investment as a savings bond? Or as risky as a subprime mortgage?

“I was just baffled as to how it could have happened,” said a publisher at a rival house, echoing sentiments that Pub Crawl heard from many other similarly well-placed sources. “To have two [books] is understandable, though strange, but to have three is completely absurd.”

According to Ms. Kennedy, though, acquiring all three titles was a deliberate strategy—an attempt to snag all the best financial reporters in the country and thus corner the market on a topic she expects will captivate readers for years to come. 

“I knew about all three books before we committed to the first one,” Ms. Kennedy said in an e-mail. “I would rather be publishing all three of the best books on the economic crisis than to be competing against any one of them at another house. … While the skepticism I’m hearing from some might have a bit of validity if all three books came out on the exact same day, the reality is they won’t.”

So when, then? At this point, given that the story these books will chronicle is still very much unfolding, it is impossible to say, though Mr. Nocera and Ms. McLean have vocally staked out at a spot in the end zone, and are planning to publish sometime in 2010.

As for Mr. Lowenstein and Mr. Sorkin, both of whom expect to have their books out before that, the race is on—though don’t expect anyone to admit that being first out of the gate is an automatic advantage. 

According to Ms. Kennedy, whose book comes out first will depend on who finishes first. In her words, “the order of publication will depend on when the authors, their editors and their publishers feel that the work is truly complete.”

Mr. Sorkin’s agent, David McCormick, echoed Ms. Kennedy’s “wait and see” attitude, but betrayed an unmistakable intention to try to get his client’s book out before Mr. Lowenstein’s.

“As far as we’re concerned, that’s an issue that still needs to be resolved, what order the books are published in, but no one’s going to have a better inside account than Andrew and hopefully that will be taken into consideration,” he said. “I want him to write a classic book and I think he can, but I also think he should do it in as timely [a way] as he can. I expect that’s what the others want to do as well.”

So will Mr. Sorkin and Mr. Lowenstein try to coordinate their projects? Or perhaps work out who’s doing what when so as to avoid any unproductive tension now that they’re playing for the same team?

“I only know Roger by reading his books. I’ve never met him—I’m sort of an admirer from afar—but to the extent that I have the opportunity to talk to him about what he’s thinking about and what I’m thinking about, that might be helpful,” Mr. Sorkin said in an interview yesterday. He added, though, that “it might be dangerous” because “ostensibly the books may compete.”

Clare Ferraro, president of Viking, which is publishing the Sorkin book, said she has reached out to Ms. Godoff at the Penguin Press to discuss timing.

“She said she doesn’t know, and I said I don’t know, either,” Ms. Ferraro said. “We’ve all had conversations with our authors about when they think they’re going to deliver, and they all get this frantic look on their faces and say, you know, ‘Well, we’ll try for this date or that date, but who really knows!’”

Mr. Sorkin, for his part, said he initially had some concerns about having all three titles come from the same publisher, but has since come around to Ms. Kennedy’s point of view.

If all three were being published by competing houses, he said, “you would have no transparency because if everything’s going the way it’s supposed to, you have no idea what everybody else is doing, when the books are coming out, how they’re going to be focused.”

Of course, there’s no reason to think the proposals that circulated last week are anything but the beginning of a long stream of financial crisis books, which means that unless the publishers under Ms. Kennedy just keep buying every single one the way they did last week, Penguin will have to face competition from outside.

“I think there will be plenty more,” said Ms. Ferraro, noting that while the business desk at the New York Times might be exhausted, she expects before too long to start seeing proposals from reporters at The Washington Post and The Wall Street Journal.

In light of this, some skeptics maintain that having three books on the same topic is an unwise risk for a publisher to take, because in all likelihood, one will do much better than the others and consequently suffocate them.

“It’s a very high-risk strategy,” said the publisher quoted earlier. “Even if you are spacing them out over a period of time, how many big books do you think the market can take, especially when we’re living under a welter of daily, hourly, minute-by-minute news breaks with many of these guys filing every morning anyway?”

Not to mention the fact that the subject is depressing to say the least. And a year or two from now, will the public, whose investments and retirement savings will hopefully have recovered, really want to revisit this dark, dark hour?

Ms. Kennedy clearly believes so. Indeed, the ravenous appetite she demonstrated for these kind of books last week arguably amounts to a triple-down bet that the current crisis will get a lot worse before it gets better.

“This moment, this story is larger than any one writer,” Ms. Kennedy said. “It affects Wall Street, Main Street and Streets all over the world. And it is continuing to unfold every day. I want more than one version, more than one point of view, and so do many others.”

lneyfakh@observer.com