WASHINGTON – A planned US$2.2 billion (S$3.1 billion) merger of Penguin Random House, the world’s largest book publisher, and rival Simon & Schuster cannot go forward, a United States judge ruled on Monday.
Judge Florence Pan, of the US District Court for the District of Columbia, said in a brief order that she found the US Justice Department had shown the deal may substantially lessen competition “in the market for the US publishing rights to anticipated top-selling books”.
Unlike most merger fights, which are focused on what consumers pay, this one focused on authors’ earnings.
The US government argued the deal should be stopped because it would lead to less competition for blockbuster books and lower advances for authors who earn US$250,000 or more.
Penguin Random House said the decision was “unfortunate” and that it would “immediately request an expedited appeal”. It said it considered the deal pro-competition.
Big-name writers on the roster at Simon & Schuster include Stephen King and Doris Kearns Goodwin, while former US president Barack Obama and his wife Michelle Obama, as well as John Grisham, have books published by Penguin Random House.
It is also preparing to release Prince Harry’s memoir in January 2023.
Penguin is owned by German media group Bertelsmann, while Paramount Global owns Simon & Schuster.
“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,” US Assistant Attorney General Jonathan Kanter said in a statement.
The US Justice Department had filed a lawsuit aimed at stopping the deal in November 2021.
In hearings held in August, the government argued that the largest five publishers control 90 per cent of the market, and a combined Penguin and Simon & Schuster would control nearly half of the market for publishing rights to blockbuster books, while its nearest competitors would be less than half its size.
Penguin Random House lawyer Daniel Petrocelli, who defeated the government in a previous merger challenge, argued during the trial that the deal would have “enormous benefits” for readers and authors alike because the imprints, or brands, owned by the two giants would continue to compete against each other.
Best-selling author King, who testified during the three-week trial, took issue with this pledge.
“You might as well say you’re going to have a husband and wife bidding against each other for the same house. It’s kind of ridiculous,” he told the court.
The top five publishers are Penguin Random House, HarperCollins, Macmillan, Simon & Schuster and Hachette, with Walt Disney and Amazon.com also in the market. HarperCollins is owned by News Corp.
Prior to the US action against the takeover, Britain’s competition authority had also taken a close look at the merger, as both groups have British divisions. It issued a favourable opinion in May 2021. REUTERS, AFP
