The Justice Department could block two of the country’s biggest publishers from joining forces, as a trial kicks off Monday to determine whether Penguin Random House should be allowed to buy Simon & Schuster—a deal the federal government alleges would hurt readers and authors by resulting in fewer books being published and authors making less money.
Simon & Schuster’s New York City headquarters in August 2016.
Penguin Random House and Paramount Global, Simon & Schuster’s parent company (then known as ViacomCBS), announced in November 2020 that Penguin planned to buy Simon & Schuster for nearly $2.2 billion, and the Department of Justice filed suit in federal court a year later in November 2021 to block the deal.
The DOJ argues the acquisition would result in less competition between publishers, leading to authors getting paid less because there won’t be as many bidding wars for their manuscripts, which the government alleges “is likely to diminish overall output, creativity, and diversity among books published.”
If the deal goes through, it could “mean that fewer authors will be able to make a living from writing,” resulting in fewer books being published and less diversity in the books that do come out, the DOJ argued in a pre-trial brief based on expected testimony from Penguin Random House Global CEO Markus Dohle.
The publishers argue the deal would not harm competition as the DOJ claims, alleging it would actually “enhance competition” by allowing Penguin Random House and Simon & Schuster to pool their resources and make better deals to authors, which in turn will force other major publishers to “compete harder” to acquire titles.
They also note the best-selling author deals that the DOJ’s legal argument centers on—advances of at least $250,000 paid by either Penguin or Simon & Schuster—apply to only about 85 book deals each year (out of 55,000 books published annually by all publishers).
Penguin Random House and Simon & Schuster will also still be operating separately and allowed to bid against each other for book deals, the publishers argue, further going against the government’s argument it will reduce competition.
Penguin Random Group and Simon & Schuster are two of what’s known as the “Big Five” publishers, along with Hachette Book Group, Harper Collins and MacMillan. Penguin Random House, owned by German media company Bertelsmann, is “by far” the largest publisher in the country, the Times notes, publishing more than 2,000 new titles each year across its more than 90 publishing imprints, according to a court filing. (Simon & Schuster publishes …….