What’s at stake as the book publishing merger faces an antitrust lawsuit



By Brian Stelter, CNN Business

A version of this article first appeared in the “Reliable Sources” newsletter. You can register for free here.

Penguin Random House announced its offer to acquire Simon & Schuster in November 2020. The deal – combining two of the top five book publishers in the US – would normally have taken effect now. But the Justice Department is standing in the way, and an antitrust trial is due to begin on Monday.

Judge Florence Pan of the United States District Court in Washington, DC will hear approximately three weeks of oral argument. The government says in its pre-trial brief that the publisher combo would “further strengthen the largest publishing giant in the United States (and the world) and give the combined company control of nearly the half of the market to acquire best-selling, early-selling authored books.

The publishers claim that “after the merger, the market dynamics will be the same” and reject the arguments that the authors will suffer.

“The closely watched case has major implications for a publishing industry that has grappled with consolidation for years,” writes Publishers Weekly reporter Andrew Albanese. “It also emerges as a key test for the government amid growing calls for more vigilant enforcement of antitrust laws, and following a crushing defeat in 2018 in its bid to block the massive $85 billion merger between AT&T and Time Warner.”

Other publishers argue that the merger would be anti-competitive. But the government bears the burden of proof. “The lawsuit will test whether the government can mount more antitrust cases targeting the effects of corporate concentration on the amount of workers’ wages — in this case, ledger authors —,” notes the NYT preview. on the trial.

The judge is expected to rule in November…

Further reading

Simon & Schuster (which, quite transparently, was the publisher of my most recent book) is going to be sold by Paramount Global one way or another. Speculation abounds about potential private equity bidders. But for now, the buyer is Penguin Random House, and S&S CEO Jonathan Karp (who already spent 16 years at PRH) said in a recent memo to staff members that “we, and our authors, will greatly benefit from being part of this superb publishing house.”

>> “Regardless of the outcome,” Karp wrote, “there will be a new owner, and “the best and most important thing we can do is stay focused on achieving excellence on behalf of our authors and of their books, assured of our aim…”

>> Joe Pompeo of Vanity Fair (whose book publisher is HarperCollins, which reportedly lost the S&S bid) reports that “the witness list is a who’s who of publishing bosses, agents of power and authors”, including Stephen King…

>> “An appearance at some point by King, whose work is published by Simon & Schuster, will be highly unusual for an antitrust lawsuit and will attract wide attention,” writes the AP’s Marcy Gordon in this great explainer…

>> Another big antitrust lawsuit is underway in DC on Monday: the government is also trying to stop insurer UnitedHealth Group from buying Change Healthcare. “The cases represent a conscious strategy by the Department of Justice to expand the boundaries of merger enforcement,” the WSJ said…

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