By Porter Anderson, Editor-in-Chief | @Porter_Anderson
PRH: ‘An Unfortunate Setback for Readers and Authors’The Bertelsmann/Penguin Random House attempt to acquire Simon & Schuster for US$2.175 billion has been, as anticipated, blocked by Judge Florence Pan at Washington’s United States District Court for the District of Columbia.
Since the August trial of the case, American publishing industry insiders have expected this to be Judge Pan’s decision, many having felt that the proposed merger was ill-defended, particularly as the government’s argument—while based on potential harm to writers—turned at many points on competition among publishers for the biggest bestsellers’ books and the sizes of their advances.
As Josh Sisco at Politico points out, the case was a needed antitrust win for the Biden administratio’s Justice Department.
It does, however, leave a good deal of consternation in the American marketplace, with the fate of a very large publishing power unresolved. Simon & Schuster is a formidably revered and storied house, 98 years old, founded in January 1924 by Richard L. Simon and M. Lincoln Schuster.
In her brief order, Judge Pan writes, “Upon review of the extensive record and careful consideration of the parties’ arguments, the court finds that the United States has shown that ‘the effect of [the proposed merger] may be substantially to lessen competition’ in the market for the US publishing rights to anticipated top-selling books. Accordingly, judgment shall be entered in favor of the plaintiff and the merger shall be enjoined.”
Writing for the government’s reaction, the assistant attorney general, Jonathan Kanter, says, “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.”
Publishing Perspectives has been provided by a brief statement on the news from Penguin Random House in New York City. It reads:
“We strongly disagree with today’s decision, which is an unfortunate setback for readers and authors, and we will immediately request an expedited appeal.
“As we demonstrated throughout the trial, the Department of Justice’s focus on advances to the world’s best-paid authors instead of consumers—or the intense competitiveness in the publishing sector—runs contrary to its mission to ensure fair competition.
“We believe this merger will be pro-competitive, and we will continue to work closely with [S&S parent company] Paramount and Simon & Schuster on next steps.”
As it happens, it is early morning (November 1) here in the United Arab Emirates, and Markus Dohle, the worldwide CEO of Penguin Random House, is slated to appear later in the morning onstage in the third and final day of the Sharjah Publishers Conference, here on the eve of the Sharjah International Book Fair (November 2 to 13).
Dohle will be making his onstage appearance “in conversation” with the Sheikha Bodour Al Qasimi of Sharjah, president of the International Publishers Association‘s (IPA) and perhaps the best-known member of the third emirates’ royal family outside the UAE.
Karp at S&S: ‘Our Company Continues to Thrive’
From Jonathan Karp, president and CEO of Simon & Schuster, a statement to the staff, provided to Publishing Perspectives, reads:
“I am writing in the wake of the US District Court’s decision to block Penguin Random House’s acquisition of Simon & Schuster. Although we are disappointed with this decision, I want to reassure all of you that, despite this news, our company continues to thrive. We are more successful and valuable today than we have ever been, thanks to the efforts of all of you on behalf of our many magnificent authors.
“I am sure that you are eager to know what the future holds for Simon & Schuster. As you may have heard, Penguin Random House has announced its intention to request an expedited appeal of the ruling. We are reviewing the decision and discussing next steps with Paramount, Bertelsmann,and Penguin Random House. We will provide you with updates as soon as we have news that we are able to share.
“Meanwhile, we should and will remain, as we always have and no matter the circumstance, single-mindedly focused on our shared purpose of being a world-class publisher. I am supremely grateful for all that you have done to help us realize that ambition.”
“At its highest and simplest level, of course, this is a case in which the biggest of the “Big Five” publishers, Penguin Random is trying to buy another of the quintet. Consolidation in the major markets of world publishing is both a concern in the international industry and also a generally accepted reality of how the contours of the very largest powers in the business are drawn.”
Simon & Schuster parent company Paramount has issued a superbly short statement:
“Paramount is disappointed by the ruling in this case.
“We are reviewing the decision and discussing next steps with Bertelsmann and Penguin Random House, including seeking an expedited appeal.”
The Court’s Ruling
More is yet to be learned of Judge Pan’s ruling. Her full ruling has not been made public, the court saying that it contains business information not to be made public. An edited (redacted) edition of her full reading is expected to be made available in coming days, so that more of her ruling can be explicated.
As Jeffrey A. Trachtenberg and Jan Wolfe are writing at the Wall Street Journal this evening in the States, “The Justice Department warned that the combined company would control approximately 49 percent of the market for anticipated top-selling books. Penguin Random House and Simon & Schuster estimated the size of that market at roughly 1,200 books annually, or 2 percent of all books published by commercial publishers.”
At The New York Times, Alexandra Alter and Elizabeth A. Harris have just updated their evening write. In it, they refer to Stephen King, “who testified that the merger would be especially harmful to writers who are just starting out, and took a contrary position to his own publisher, Scribner, which is part of Simon & Schuster. On Monday night, Mr. King said in an email interview that he was ‘delighted with the outcome.’”
They also note, as have many, that the US Department of Justice, in focusing on allegations about the proposed impact of the merger on authors, has signaled a change in its traditional approach, which has reliably looked at possible effects on consumers rather than an industry’s vendors (authors).
A note for clarity: In February, ViacomCBS informed its investors that it was changing its name to Paramount Global. At times, you’ll see coverage using one or both names to refer to the parent company of Simon & Schuster, most frequently now called simply “Paramount.”
More on the still-ongoing coronavirus COVID-19 pandemic and its impact on international book publishing is here.