A federal judge on Monday blocked Penguin Random House’s proposed purchase of Simon & Schuster, agreeing with the US Department of Justice that combining two of the world’s largest publishers could “reduce competition” for the “best books”. more sold”.
U.S. District Court Judge Florence Y. Pan announced the decision in a brief statement Monday, noting that much of her ruling remains under seal at this time due to “confidential information” and “highly sensitive information.” confidential”. She asked both parties to meet with her on Friday and suggest redactions.
Penguin Random House quickly condemned the decision, calling it “an unfortunate setback for readers and authors.” In its Monday statement, the publisher said it would seek an expedited appeal.
Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division welcomed the decision.
“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,” Kanter said.
Pan’s conclusion was not surprising – for much of the three-week trial in August, she indicated her agreement with the Justice Department’s assertion that Penguin Random House’s plan to buy Simon & Schuster , for 2.2 billion US dollars, could harm a vital cultural industry.
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But it was still a dramatic departure from recent history in the world of books and beyond. The publishing industry has been consolidating for years with little government interference, even when Random House and Penguin merged in 2013 and formed what was then the largest memoir publishing house.
The union of Penguin Random House and Simon & Schuster would have created a business far surpassing any rival and those opposed to the merger included one of Simon & Schuster’s iconic writers, Stephen King, who testified the last summer on behalf of the government.
I am delighted that Judge Florence Pan blocked the merger of Penguin Random House and Simon & Schuster. The proposed merger never concerned readers and writers; it was to preserve (and increase) PRH’s market share. In other words: $$$
High termination fees if the merger fails
The Justice Department’s case against Penguin Random House did not focus on overall market share or potential price increases for customers. Instead, the DOJ argued that the new company would so dominate the market for trade books — those with author advances of $250,000 and more — that the size of the advances would shrink and the number of releases would decline.
For Penguin Random House and the New York-based publishing world, the August lawsuit proved an often uncomfortable airing of business practices, internal disagreements and missed opportunities. Leaders on the stand talked about bestselling works they failed to acquire and acknowledged that most books don’t make money. Private emails and text messages revealed tensions between senior Penguin Random House officials.
Justice Department Obtains Permanent Injunction Blocking Proposed Acquisition of Simon & Schuster by Penguin Random House
Decision protects authors and promotes diversity and quality of best-selling bookshttps://t.co/LEpuojy1uC
“I apologize for the heated language,” Penguin Random House Global CEO Markus Dohle said after some text messages were posted.
Dohle had promised that Penguin Random House and Simon & Schuster imprints would still be allowed to bid against each other for books. But he admitted under oath at trial that his guarantee was not legally binding. Furthermore, Pan has consistently challenged Penguin Random House’s assurances that the merger would not lessen competition.
Simon & Schuster will likely find itself under new ownership regardless of the outcome of the legal challenges. The publisher had been put up for sale long before the Penguin Random House deal was announced at the end of 2020 and the publisher’s parent company, Paramount Global, said it did not see Simon & Schuster as doing part of his future. Among the bidders against Penguin Random House was Rupert Murdoch’s News Corp, which owns HarperCollins Publishers.
Penguin Random House and company owner Bertelsmann would have to pay a termination fee of about $200 million to Paramount if the merger fails, under the terms of the proposed sale.
In a corporate memo shared Monday with The Associated Press, Simon & Schuster CEO Jonathan Karp sought to reassure employees that “despite this news, our business continues to thrive. We are more successful and of value today than ever, thanks to the efforts of all of you on behalf of our many magnificent authors.”
Monday’s news follows recent Justice Department losses in two major antitrust cases in separate federal courts. The DOJ lost its bid to prevent a major US sugar maker, US Sugar, from acquiring rival Imperial Sugar Co., one of the nation’s largest sugar refiners. He was also blocked in his efforts to block the roughly $8 billion acquisition by UnitedHealth Group, which runs the largest U.S. health insurer, of Change Healthcare, a health care technology company.
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