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Tuesday, March 21, 2023

U.S. Judge Blocks Penguin Random House – Simon & Schuster Merger

The decision, according to Penguin Random House, was "unfortunate"

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UNITED STATES: The largest book publisher in the world, Penguin Random House, and rival Simon & Schuster had planned to merge for $2.2 billion. However, the deal was rejected on Monday by a U.S. judge.

The Justice Department had demonstrated, according to Judge Florence Pan of the U.S. District Court for the District of Columbia, that the agreement may significantly decrease competition, she found in a brief judgment.

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Contrary to most merger disputes, which center on consumer prices, this one was concerned with writers’ remuneration. The government argued that the agreement should be scrapped because it would lessen the competition for best-selling novels and result in smaller advances for authors who make at least $250,000.

The decision, according to Penguin Random House, was “unfortunate,” and the publisher stated it would “immediately request an expedited appeal.” It declared that the arrangement was pro-competitive.

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Ina Garten, a recipe author, and the authors Zadie Smith and Danielle Steele are published by Penguin. In contrast, Stephen King, Jennifer Weiner, and Hillary Rodham Clinton, among others, are published by Simon & Schuster.

The government contended during hearings in August that the top five publishers account for 90% of the market and that Penguin and Simon & Schuster combined would have about half the market share for publishing rights to best-selling novels, while its closest rivals would be less than half its size.

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Daniel Petrocelli, a lawyer for Penguin Random House who previously defeated the government in a merger challenge, asserted during the trial that the deal would have “enormous benefits” for both readers and authors because the two companies’ imprints, or brands, would still be in direct competition with one another.

The top five publishers are Walt Disney Co. and Amazon.com Inc. with Penguin Random House, HarperCollins, Macmillan, Simon & Schuster, and Hachette rounding out the list. News Corp. is the owner of Harper Collins.

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