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 Justice Department is standing in the way, and an antitrust trial is set to begin Monday.
Judge Florence Pan of the U.S. District Court in Washington will hear about three weeks of oral arguments. The government said in its preliminary memo that the combination of publishers “will further strengthen the largest publishing giant in the United States (and the world) and give the combined company control of nearly half the market to acquire expected best-selling books by authors.”
The publishers say that “after the merger, the dynamics of the market will be the same” and reject arguments that authors will suffer.
“The closely watched case has major implications for a publishing industry that has struggled with consolidation for years,” Publishers Weekly reporter Andrew Albanese wrote. “It also looms as a key test for the government amid growing calls for more vigilant enforcement of antitrust rules and in the wake of a crushing defeat in 2018 in its attempt to block the massive $85 billion merger between AT&T and Time Warner .” Other publishers argued that the merger would be anti-competitive. But the government bears the burden of proof. “The suit will test whether the government can bring more antitrust cases targeting the effects of corporate concentration on how much workers — in this case, writers of big books — are paid,” notes the NYT review of the case.
The judge is expected to rule in November…
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Simon & Schuster (who, full disclosure, were the publishers of my last book) will 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 previously spent 16 years at PRH) said in a recent memo to employees that “we and our authors stand to gain a lot 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 remain focused on achieving excellence on behalf of our authors and their books, confident in our aim …”
>> Joe Pompeo of Vanity Fair (whose publisher is HarperCollins, which reportedly lost the bid for S&S) reports that “the witness list is a who’s who of publishing heads, powerful agents and authors,” including Stephen King… >> “The appearance at some point of King, whose works are published by Simon & Schuster, would be highly unusual for an antitrust trial and would draw widespread attention,” writes AP’s Marcy Gordon in this great explainer…>> Another big antitrust trial begins in D.C. Monday: The government is also trying to block insurer UnitedHealth Group from buying Change Healthcare. “The cases represent a deliberate strategy by the Justice Department to expand the boundaries of merger enforcement,” says the WSJ…
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