Publishing phenomenon The Girl with the Dragon Tattoo could not save Rupert Murdoch's nephew Matt Handbury who is negotiating to sell the remainder of his publishing empire - Murdoch Books - to Allen & Unwin.

"We're in exclusive discussions with Allen & Unwin, there's no sale been finalised yet," Handbury said.

Speaking of the reasons behind the sale, Handbury said: "I think we've got a much reduced market and our form of publishing needs to be in a bigger business where the overheads can spread out a bit."

Specialising in lavish food and illustrated books, Murdoch Books expanded its second imprint business, Pier 9, after the success of the imported Girl with the Dragon Tattoo series but ran into hard times and severely cut costs and staff this year.

"We can no longer pretend that things will be viable as they are," Handbury said in May when 26 staff were laid off.

He said the online sale of physical books had had a devastating effect on Australian bookstore and other retail sales.

In 2010, the Girl with the Dragon Tattoo series comprised three of the top four selling books in the country with more than 770,000 copies sold.

Handbury acquired Murdoch Magazines from News Ltd in 1991. He sold the magazine business to Kerry Stokes's Seven Network in 2005 for A$77 million ($98 million), but retained Murdoch Books.

- BusinessDay.com.au