Breaking International News: With the two largest Russian publishers, EKSMO and AST, announcing a surprise merger, an emerging market will be re-defined.

Announcement made at the BEA Global Market Forum Russia in New York, at a project of Rüdiger Wischenbart Content and Consulting.

 

The news was short, yet its impact on Russian publishing will be huge. “Two days ago, we signed an agreement on a joint venture between EKSMO and AST”, said Yuri Dikalo, the CEO of the second largest Russian publishing group AST, and EKSMO’s CEO, Oleg Novikov, sitting next to him, just nodded. In fact, EKSMO, the number one in Russian publishing, is acquiring the number two, AST.

The surprise was made public at the kick off panel of the BookExpo America: Global Market Forum Russia, which I had the pleasure to organize and moderate earlier today in New York City. A line up of prestigious speakers had gathered to introduce “The Vast Russian Book & Publishing Marketplace” to the American publishing community, thereby analyzing recent turbulent developments.

Vladimir Grigoriev, deputy head of the Russian government’s Federal Agency for Press and Mass Communication, had started the overview by introducing Russia as a country with a unique tradition of reading and literature, and now an emerging market opening up to globalization. Then, legendary literary agent Andrew Nurnberg, who had opened an office in Moscow already in 1993, recalled the Soviet era of only state owned publishing, before my innocent question to Dikalo and Novikov, asking them to present their perspective triggered the stunning announcement.

The surprise deal is the latest shake up in the Russian publishing market, which since the crisis hit in 2008, has shrunk continuously from almost 3 bn US$ of value at consumer prices to below 2.5 bn$ in 2011. The overall economic turbulences are generally held to be responsible alongside a booming ebook reading based however on a 90% piracy rate for downloads, a pattern also highlighted by Oleg Novikov in his analysis presented at the BEA conference in New York.

And yet, Russian publishers showed high ambitions at BookExpo America to overcome such challenges with a mix of trust in their domestic entrepreneurship and innovative spirit, mirrored in ventures such as the LitRus ebook platform (www.litres.ru ), government sponsored initiatives to boost their infrastructure notably in distribution, and in searching for international partnerships.

The approach has indeed triggered interest among global players, with French Hachette Livres buying into children and adult youth literature group Atticus, or with the highly successful creation of a Russian arm for Scandinavian Egmont.

The takeover of AST by EKSMO may be however bringing about an entirely new format, as was instantly emphasized by agent Andrew Nurnberg who pointed to the vertical integration of EKSMO with its retail arm as well as its high profile in spearheading the ebook revolution.

Building such consolidated power is, according to Oleg Novikov at the BEA panel, just a life saving measure given the scope of the challenges confronted by publishers and, even more dramatically, by retailers in Russia. (The largest book chain, Top Kniga, went out of business recently).

EKSMO, established in 1991 as a small book-selling company, which gradually became a major player on the Russian market. The EKSMO portfolio includes books of fiction and non-fiction, books for children and young adults, reference and educational publications, as well as a significant position in distribution, with notably 9 regional distribution centers, and the acquisition of LitRes in 2009, claims a 20 percent market share on the Russian book market. For 2010, EKSMO reported revenues of 6580 m Rubles (or 160 m€).

AST was established in 1990 and has become one of the largest book publishing groups in Russia, responsible for about 13% of the Russian book production (by number of copies). AST Publishing comprises of several imprints including Astrel, Avanta+, Premiera-Media, Corpus, comic book and Manga publisher Comics Factory. It also owns a book-store chain called „Bukva“.

EKSMO and AST have been the first Russian publishing companies with a presence on the Global Ranking of the Publishing Industry in 2011, which we research and update every year since 2006 and which has been initiated by Livres Hebdo, and is co-published by The Bookseller, buchreport, Publishers Weekly and Publish News Brazil. The 2012 update is under preparation for release later this month (June 2012).

For details on Oleg Novikov and Yuri Deikalo see at ReadRussia2012.