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US judge blocks $2.2 billion Penguin Random House merger | Publishing

US judge blocks $2.2 billion Penguin Random House merger | Publishing

A US judge has blocked a planned $2.2 billion merger of Penguin Random House, the world’s largest book publisher, with rival Simon & Schuster.

Judge Florence Pan of the U.S. District Court for the District of Columbia said in a brief order on Monday that she found the Justice Department had shown that the deal would “significantly” harm competition “in the market for U.S. publishing rights to projected best-selling books.”

Unlike most merger battles, which focus on what consumers pay, this one focused on how much money authors make. The US government argued that fewer publishing houses competing with each other would lead to lower advancements for authors worldwide, but it focused on a small part of the market: bestselling authors who were paid $250,000 or more.

The government identified best-selling titles that were the subject of bidding wars between PRH and Simon & Schuster, and argued that competition drove up how much an author was paid.

The top five publishers control 90% of the market. PRH and Simon & Schuster combined would control 49% of the blockbuster book market, while its closest competitors would be less than half its size.

The CEOs of PRH and Simon & Schuster have argued that bidding wars between the two companies are rare, and argued that a merger would actually benefit writers’ wages by creating savings and allowing them to spend more on books.

PRH writers include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele, while Simon & Schuster publishes Stephen King, Jennifer Weiner and Hillary Clintonamong others.

The news is a major victory for the Biden administration, which has tried to tighten its antitrust enforcement. Ministry of Justice argued the merger would “exercise a huge impact on what books are published in the United States and how much authors are paid for their work.”

Penguin Random House lawyer Daniel Petrocelli, who defeated the government in a previous challenge to the merger, argued during the trial that the deal would have “enormous benefits” for readers and authors, as the imprint or brands owned by the two giants would still compete against each other. .

King, author of numerous bestsellers including It, The Stand and The Shining, was among a number of best-selling authors and agents to testify during the three-week trial. He disputed arguments that the merger would bring “huge benefits”.

“You might as well say you’re going to have a husband and wife competing against each other for the same house. It’s kind of ridiculous,” King told the court. “Consolidation is bad for competition.”

At Monday, King told the New York Times that he was “delighted with the outcome”.

“Further consolidation would cause slow but steady harm to writers, readers, independent booksellers and small publishing companies,” he said. “Publishing should be more focused on cultural growth and literary achievement, and less on corporate balance sheets.”

Penguin is owned by German media group Bertelsmann, while Paramount Global is owned by Simon & Schuster.

In a statement, Penguin Random House called the decision “an unfortunate setback for readers and authors” and argued that “the Department of Justice’s focus on advancing the world’s best-paid authors instead of consumers or the intense competition in the publishing sector runs counter to its mission to ensure fair competition.” .

Reuters contributed to this story



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