Judge Blocks $2.2 Billion Penguin Random House and Simon & Schuster Merger
A federal judge has blocked Penguin Random House’s plan to acquire rival Simon & Schuster and create a book publishing monolith.
District Court Judge Florence Y. Pan handed a victory to the Biden administration with the ruling, supporting its increased antitrust enforcement. The court found that the planned combination may “substantially lessen competition” in the market for the U.S. publishing rights to anticipated top-selling books, according to court papers.
“Today’s decision protects vital competition for books and is a victory for authors, readers, and the free exchange of ideas,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division in a statement. “The proposed merger would have reduced competition, decreased author compensation, diminished the breadth, depth, and diversity of our stories and ideas, and ultimately impoverished our democracy.”
Also Read:
Is Netflix’s Binge Model Still the Best Streaming Release Strategy? – It’s Complicated | Charts
But Penguin Random House, which is owned by the German media conglomerate Bertlesmann and is the largest publisher in the U.S., with a stable that runs from Michelle Obama to “The Handmaid’s Tale” scribe Margaret Atwood to historian Jon Meacham, has said it will appeal the decision.
In a statement, Penguin Random House called the decision “an unfortunate setback for readers and authors” and argued that “the Department of Justice’s focus on advances to the world’s best-paid authors instead of consumers or the intense competitiveness in the publishing sector runs contrary to its mission to ensure fair competition,” according to The New York Times.
“As we demonstrated throughout the trial, the Department of Justice’s focus on advances to the world’s best-paid authors instead of consumers or the intense competitiveness in the publishing sector runs contrary to its mission to ensure fair competition,” the statement said. “We believe this merger will be pro-competitive, and we will continue to work closely with Paramount and Simon & Schuster on next steps.”
The court’s reasoning is under seal because it contains confidential information about the two businesses. They are expected to suggest redactions to protect the material by Friday, before the rest of the decision is released, Publisher’s Weekly reported. In comments made at the Sharjah International Book Fair, PRH CEO Markus Dohle suggested the ruling was “political” in nature, the publication reported.
Also Read:
Sony Pictures Q2 Profit Slides to $202 Million While Music Drives Parent Company’s Profits Up 24%
“I think the ruling is utterly wrong,” Dohle said, reiterating his belief that the merger would have been pro-competitive. “We would have been able to sell more Simon & Schuster titles than they would have been able to sell on their own,” Dohle said, adding that the combined companies would have represented less than 20% of the overall book market, where “Amazon represents more than 50% of the retail market.”
Meanwhile, Stephen King responded to the decision by tweeting, “I am delighted that Judge Florence Pan has blocked the merger of Penguin Random House and Simon & Schuster.” The horror author has published with Simon & Schuster for years and was outspoken in his opposition to the combination. “The proposed merger was never about readers and writers; it was about preserving (and growing) PRH’s market share. In other words: $$$.”
The planned $2.175 billion cash deal was inked in November 2020, several months after ViacomCBS announced it was shopping its publishing arm.
Penguin Random House is the nation’s largest book publisher. Simon and Schuster is No. 3 in the country. Critics, including King and the Biden Justice Department, argued it would result in lower advances for authors and harm those who are early in their careers, while reducing the number and range of books published.
Also Read:
Elon Musk Haggles With Stephen King Over Blue Check Billing Scheme: ‘How About $8?’
