The Justice Division is suing to block a $2.2 billion book publishing deal that may have reshaped the trade, saying consolidation would harm authors and, finally, readers.
German media big Bertelsmann’s Penguin Random Home, already the most important American publisher, needs to purchase New York-based Simon & Schuster, whose authors embrace Stephen King, Hillary Clinton and John Irving, from TV and movie firm ViacomCBS. (ViacomCBS can also be the dad or mum firm of CBS Information.)
The Division of Justice filed an antitrust suit within the U.S. District Courtroom for the District of Columbia Tuesday within the first major antitrust motion by the Biden administration, saying the deal would let Penguin Random Home “exert outsized influence over which books are published in the United States and how much authors are paid for their work.”
“If the world’s largest book publisher is permitted to acquire one of its biggest rivals, it will have unprecedented control over this important industry. American authors and consumers will pay the price of this anticompetitive merger – lower advances for authors and ultimately fewer books and less variety for consumers,” mentioned Legal professional Basic Merrick Garland in an announcement.
The acquisition of Simon & Schuster would scale back the so-called Huge 5, which dominate American publishing and embrace HarperCollins, Hachette Book Group and Macmillan, to 4.
The deal raised involved from writers and from rival publishers. The Authors Guild, a writers’ group, has mentioned it opposes the acquisition as a result of there could be much less competitors for authors’ manuscripts. Rupert Murdoch’s Information Corp, which owns HarperCollins and had reportedly additionally been excited about shopping for Simon & Schuster, slammed the deal. Its CEO Robert Thomson mentioned final fall that Bertelsmann was “buying market dominance as a book behemoth.”
In an announcement, the publishers mentioned they’d battle the lawsuit and blocking the deal would hurt authors. “DOJ’s lawsuit is wrong on the facts, the law, and public policy,” mentioned Daniel Petrocelli, Penguin Random Home’s lawyer. “Importantly, DOJ has not found, nor does it allege, that the combination will reduce competition in the sale of books.”
Petrocelli, the vice chair of O’Melveny & Meyers, is a high-profile lawyer who defended AT&T towards the Justice Division’s failed try to block its Time Warner buy underneath the Trump administration.
The businesses say that their publishing imprints will proceed to compete towards each other for books after the deal closes, and that Penguin Random Home shouldn’t be planning to cut back the variety of books acquired or the quantities paid for the book offers.
Penguin Random Home’s proposed acquisition of Simon & Schuster follows a long time of consolidation within the publishing trade. Penguin and Random Home themselves merged lower than a decade in the past, in 2013. Acquisitions have intensified lately as publishers search a stronger bargaining place with the nation’s greatest bookseller, Amazon.com.
“Today’s decision by the DOJ was unexpected given that so many other major mergers and acquisitions in the publishing industry have gone through recently and over the last few decades with nary a raised eyebrow from DOJ,” mentioned Mary Rasenberger, CEO of the Authors Guild, in an announcement Tuesday.
President Joe Biden has known as for larger scrutiny of mergers as a part of his effort to improve competitors and stanch company energy. He has assembled a workforce of regulators and advisers to attempt to counteract monopoly energy, together with putting in Huge Tech critic Lina Khan as chair of the Federal Commerce Fee and nominating antitrust lawyer Jonathan Kanter to head DOJ’s antitrust division.
In its criticism, the Justice Division alleges that ought to Penguin Random Home purchase Simon & Schuster, it could management practically half the marketplace for buying anticipated top-selling books. The federal government argues that this could lead to much less profitable advances for writers, because the two firms would not compete towards one another for the correct to publish a book. Decrease creator pay would make it tougher for writers to make a residing by writing books, the federal government says, and ultimately imply fewer books revealed and fewer number of books on the market for readers.
