Justice Department puts on hold massive merger of book publishers

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Stephen King is known for many things: The King of Horror, an extraordinary short story, recognized philanthropist. Soon he will don a new identity at the center of an unfolding drama in real life: star witness.

The US Department of Justice is calling the author to the stand as it sues to block a merger between mega book publishers Penguin Random House and Simon & Schuster. The trial, which begins today, will likely be worthy of a John Grisham novel.

Slaughterhouse-Five (Major Publishers)

In the world of book publishing, a so-called Big Five of publishers reign supreme: MacMillian, Harper Collins, Hachette Book Group, Simon & Schuster and Penguin Random House (itself a merger in 2013 which ended the era of a Big Six). When Penguin Random House announced in fall 2020 that it had agreed to acquire Simon & Schuster, authors, analysts and industry leaders decried that the new landscape would not be so much a new Big Four, but rather a clear titan and three other small competitors – not to mention the countless small independent book houses.

The acquisition, pegged at just under $2.2 billion, proved eye-opening enough to draw the attention of the merger-skeptical Justice Department away from Silicon Valley. According to them, the post-merger Penguin House could create a company of Orwellian proportions:

  • The new company would be seen as a monopoly, according to the Justice Department, capable of exerting too much control over authors of top-selling books who can currently demand advances of more than $250,000. The new home could kill competition and reduce progress across the industry.
  • Industry analysts, meanwhile, said The New York Times that the combined company would produce a disproportionate amount of chart-topping books in an industry increasingly reliant on blockbuster sales. Penguin Random already accounted for 38 of the 100 best-selling books in print last year, while Simon & Schuster had 11, according to NPD Bookscan.

The penguin’s complaint: Penguin’s parent company, Bertelsmann, says access to supply chain and distribution economies of scale will allow it to pay authors more, not less, and the two houses will continue to bid separately for new ones. books.

All the king’s men: Stephen King, who publishes at Simon & Schuster, testifies against the merger. “The more big publishers consolidate, the harder it is for independent publishers to survive,” King said. “And that’s where good writers actually start and learn their talents.” The author of The stall it’s, well, taking a stand.

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