US Justice Department Blocks Penguin Random House Merger
Written by: Katie Scott, Business Reporter
The $2.2bn proposed merger between publishing giants Penguin Random House (PRH) and Simon & Schuster has been blocked by a US judge.
In a move that will be celebrated by the Biden administration, Judge Florence Pan of the US district court for the District of Columbia said that she believed that the Justice Department had proved that the deal would “substantially” harm competition “in the market for the US publishing rights to anticipated top-selling books”.
The Justice Department’s argument centred upon the potential impact of author’s pay for their works. The competition for works currently drives up advances for authors, including those bestselling writers who were paid $250,000 or more. It pointed to examples of titles that had come about after a bidding war between PRH and Simon & Schuster. This was supported by a number of authors who took to the stand. World-renowned author Stephen King told the court: “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. Consolidation is bad for competition.”
He followed his court appearance with an interview with the New York Times in which he stated he “...delighted with the outcome.” He added: “Further consolidation would have caused slow but steady damage 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.”
In contrast, reports The Guardian: “Executives from PRH and Simon & Schuster argued that bidding wars between the two companies were infrequent, and claimed that the merger would actually benefit writer pay, because it would lead to savings and allow them to spend more on books.”
In a statement, PRH called the decision “an unfortunate setback for readers and authors”. It stated that the Justice Department’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”. It has stated an intention to appeal the decision.
