November 27, 2022

Save the Net Books

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Court blocks merger of Penguin Random House and Simon & Schuster

3 min read

A federal court has blocked Penguin Random House’s acquisition of Simon & Schuster, one of its main competitors. Judge Florence Y. Pan’s verdict was announced late in the day on October 31, but the entire order is temporarily sealed to protect confidential information. The case has been closely watched by the publishing industry – which has already seen extensive consolidation over the past twenty years – and beyond.

A short two-page document was released by the District Court for the District of Columbia, which reads: “After reviewing the extensive records and careful consideration of the parties’ arguments, the Court finds that the United States has demonstrated that ‘the effect of [the proposed merger] could be to significantly reduce competition in the US publishing rights market for books that are likely to sell well.”

A federal judge blocked a bid by Penguin Random House, the largest book publisher in the United States, to buy one of its main competitors, Simon & Schuster.

— New York Times Books (@nytimesbooks) November 1, 2022

Penguin Random House has previously announced that it will appeal the verdict, and officials released the following statement:

“We strongly disagree with today’s decision, which represents an unfortunate setback for readers and authors, and will immediately seek an expedited appeal. As we have shown throughout the process, the Justice Department’s focus on advances to the world’s highest-paid authors rather than consumers or the intense competition in the publishing sector runs counter to its mission to ensure fair competition. We believe this merger will be pro-competitive and we will continue to work closely with Paramount and Simon & Schuster on the next steps.”

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The Justice Department, meanwhile, has lauded the ruling blocking the $2.2 billion acquisition, saying the decision “protects vital competition for books and is a victory for authors, readers and the free exchange of ideas.” The proposed merger would have reduced competition, reduced author compensation, reduced the breadth, depth and variety of our stories and ideas, and ultimately impoverished our democracy.” Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division also called it “a victory for the workers in the broader sense”.

The acquisition of Simon & Schuster, the fourth largest, by Penguin Random House, the largest single publisher in the United States, was first announced in November 2020. The merger would have created a publishing company controlling about a third of the publishing business. The Justice Department sued Penguin Random House over the proposed acquisition in November 2021 and went to court in August 2022. and authors testified at the trial.

I am pleased that Judge Florence Pan blocked the merger of Penguin Random House and Simon & Schuster. The proposed merger was never about readers and authors; it was about maintaining (and expanding) PRH’s market share. In other words: $$$

— Stephen King (@StephenKing) November 1, 2022

Author Stephen King, who testified against the merger, said he was pleased with the ruling that “Judge Florence Pan blocked the merger of Penguin Random House and Simon & Schuster. The proposed merger was never about readers and authors; it was about maintaining (and expanding) PRH’s market share. In other words, $$$” His comments were echoed by many in the industry on social media following the announcement.

To read more about our coverage of the proposed merger and the DOJ’s response:

Penguin Random House buys Simon & Schuster

Justice Department files suit against Penguin Random House takeover of Simon & Schuster

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