US judge blocks $2.2 billion Penguin Random House merger | publication
A US judge has blocked the proposed $2.2 billion merger of Penguin Random House, the world’s largest book publisher, with competitor Simon & Schuster.
Judge Florence Pan of the U.S. District Court for the District of Columbia said in a brief order Monday that she found the Justice Department had demonstrated that the deal would “materially” impair competition in the U.S. publishing rights market. Books”.
Unlike most merger battles, which focus on what consumers pay for, this one focused on author revenue. The US government argued that fewer publishers competing would result in lower upfront payments for authors across the board, but it focused on a small segment of the market: best-selling authors making $250,000 or more.
The government identified best-selling titles that were the subject of bidding wars between PRH and Simon & Schuster, arguing that the competition had pushed up the author’s pay.
The top five publishers control 90% of the market. A merger of PRH and Simon & Schuster would control 49% of the blockbuster book market, while its closest competitors would be less than half the size.
PRH and Simon & Schuster executives argued that bidding wars between the two companies were rare, claiming that the merger would actually be in favor of authors’ compensation, as it would result in savings and allow them to spend more on books.
PRH contributors include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele, while Simon & Schuster publishes Stephen King, Jennifer Weiner and Hillary Clintonamong other.
The news is a major victory for the Biden administration, which has sought to tighten its antitrust enforcement. The Ministry of Justice argued the merger would “exercise an outsize influence over what books are published in the United States and how much authors are paid for their work.”
Penguin Random House attorney Daniel Petrocelli, who defeated the government in a previous merger lawsuit, argued during the trial that the deal would have “tremendous benefits” for readers and authors alike since the imprints, or brands, are owned by the two giants would continue to compete against each other.
King, author of numerous bestsellers including It, The Stand and The Shining, was among a number of bestselling authors and agents who testified during the three-week trial. He countered, arguing that the merger would bring “tremendous benefits.”
“You might as well say that a man and a woman will bid against each other for the same house. It’s kind of ridiculous,” King told the court. “Consolidation is bad for competition.”
On Monday, King to the New York Times that he was “delighted with the result”.
“Further consolidation would have slowly but steadily hurt writers, readers, independent booksellers and small publishers,” he said. “Publishing should focus more on cultural growth and literary achievements and less on corporate balance sheets.”
Penguin is owned by the German media group Bertelsmann, while Paramount Global owns Simon & Schuster.
In a statement, Penguin Random House called the decision “an unfortunate setback for readers and writers,” arguing that the Justice Department’s “focus on progress for the world’s highest-paid authors rather than consumers, or the intense competition in the publishing sector, is at odds with its mission, to ensure fair competition”.
Reuters contributed to this story
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