US bid for block book merger explained

Penguin Random House announced its bid to acquire Simon & Schuster in November 2020. The deal — bringing together two of the top five book publishers in the United States — would normally have gone into effect by now. But the US Department of Justice is standing in the way, and an antitrust case is set to begin Monday.

Judge Florence Pan of the US District Court in Washington, DC will conduct oral arguments for approximately three weeks. The government says in its pre-trial brief that the publishing combination would “further entrench the largest publishing giant in the United States (and the world) and give the combined company control of nearly half the market to acquire anticipated best-selling books from authors.” “

“The market dynamics will be the same after the merger,” the publishers say, dismissing the argument that authors would suffer.

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

Other publishers argue that the merger is anti-competitive. But the government bears the burden of proof. “The lawsuit will test whether the government can pursue additional antitrust cases aimed at the impact of corporate concentration on how much workers — in this case authors of big books — are paid,” the NYT summary of the lawsuit reads.

The judge is due to decide in November…

CONTINUE READING

Simon & Schuster (which, quite openly, was the publisher of my last book) is being sold by Paramount Global in one way or another. There is much speculation about potential private equity bidders. But for now, the buyer is Penguin Random House, and S&S CEO Jonathan Karp (who previously worked at PRH for 16 years) said in a recent memo to employees that “we and our writers will benefit greatly from being part of this great company.” become a publisher.”

>> “Regardless of the outcome,” Karp wrote, there will be a new owner, and “the best and most important thing we can do is focus on achieving excellence on behalf of our authors and their books, which in anchored to our goal…”

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

>> “An appearance at any time by King, whose work will be published by Simon & Schuster, will be highly unusual for an antitrust case and will draw a great deal of attention,” writes AP’s Marcy Gordon in this great explainer…

>> Another major antitrust lawsuit begins Monday in DC as the government also seeks to block insurer UnitedHealth Group from buying Change Healthcare. “The cases represent a deliberate strategy by the Justice Department to push the boundaries of merger enforcement,” says the WSJ…

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