This is why the Biden administration is trying to block Penguin Random House from buying Simon & Schuster.

Top line

When Penguin Random House begins Monday to decide whether to be allowed to buy Simon & Schuster, the Justice Department could block two of the nation’s largest publishers from joining — a federal deal that hurts readers and authors, resulting in fewer books being published and authors earning less.

Key facts

Penguin Random House and Paramount Global, the parent company of Simon & Schuster (then known as ViacomCBS), announced plans to buy Penguin Simon & Schuster for about $2.2 billion in November 2020, and the Justice Department filed suit in federal court a year later. November 2021 to close the deal.

The DOJ argues that the purchase will lead to less competition among publishers, which will result in less pay for authors because there won’t be as many bidding wars for manuscripts, which the government says could “reduce overall output, creativity and diversity.” Printed Books”

If the deal goes through, it “would mean that fewer authors could make a living writing,” resulting in fewer books being published and less diversity in the books being published, the DOJ argued in a pretrial brief. According to an expected testimony from Penguin Random House Global CEO Markus Dohle.

The publishers argue that the deal won’t harm competition, the DOJ says, and that it will “enhance competition” by allowing Penguin Random House and Simon & Schuster to pool their resources and make better deals for authors, which would compel other major publishers. “To compete hard” for titles.

They also noted the best-selling author deals that the DOJ’s legal dispute has focused on—at least $250,000 in advances paid by Penguin or Simon & Schuster for about 85 book deals each year (out of 55,000 books published by all publishers each year).

The publishers argue that Penguin Random House and Simon & Schuster will still operate separately and be allowed to compete with each other for book deals, further countering the government’s argument that it reduces competition.

Key background

Penguin Random Group and Simon & Schuster are two of the so-called “Big Five” along with Hachette Book Group, HarperCollins and Macmillan. Penguin Random House, owned by German media company Bertelsmann, is the largest publisher in the country. Times Notes, publishes more than 2,000 new titles each year in more than 90 print publications, according to court filings. (Simon & Schuster published roughly 1,000 new titles under 30 imprints.) The company itself is the result of a major acquisition deal since the July 2013 merger of Penguin and Random House, which analysts said at the time was an attempt to better compete with tech companies. Like Amazon and the influence of e-books and the Internet is increasing. The DOJ’s lawsuit is part of a broader antitrust effort by the Biden administration, and is also aimed at underscoring the White House’s commitment to enforcing federal antitrust laws after President Joe Biden signed an executive order in July 2021. .

What should be seen

The trial in federal district court in Washington, D.C. will last two to three weeks, with a final verdict expected in November, CNN and Useless fair Report it. Among those scheduled to testify at the hearing is Stephen King, a famous author published by Simon & Schuster, who is expected to testify for the government. Wall Street Journal In the year In November 2021, he was “pleased” by the DOJ’s lawsuit. Several other major literary agents and executives are also expected to testify. Useless fair Reports, with Pulitzer Prize-winning journalist and best-selling author Charles Duhigg.

We do not know

The trial will be the result, and improvements in any way. If the deal is allowed to go forward, other publishing heavyweights could announce mergers of their own to better compete. New York Times Notes and analysts say that if Penguin Random House and Simon & Schuster merged, they would “make up a percentage of the top-selling books.” If the deal falls through, however, the fate of Simon and Schuster could be in doubt. Paramount Global has decided to walk away from it—which prompted the deal in the first place—and will still need to find another buyer. Other major publishers may be less willing to acquire it and risk antitrust charges. Times notes, suggesting it may go to a private equity firm, which could result in layoffs and fewer book titles.

Further reading

Justice Department files suit to block Penguin Random House’s acquisition of Simon & Schuster (Forbes).

Bertelsmann behemoth: ViacomCBS to sell Simon & Schuster to Penguin Random House for nearly $2.2 billion (Forbes)

Will the largest publisher in the United States continue to grow? (New York Times)

An antitrust show is about to begin to decide the fate of Simon and Schuster (Vanity Show).

Book-industry insiders support Biden administration’s bid to end publishing mega-merger (Fair Fair).

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