Penguin Random House's acquisition of rival book publisher Simon & Schuster for about $2.18 billion has been blocked by a federal judge who agreed with the US Justice Department that the planned merger would unlawfully lessen competition, the Wall Street Journal reported.
A merger of the two companies would have given the combined company some of the world’s best-selling authors including Stephen King. On a sales basis, a combination of Penguin Random House and Simon & Schuster would have accounted for nearly 30% of all consumer-book sales in the US, according to book tracker NPD BookScan.
King testified against the merger during the first week of the trial on behalf of the government. “Consolidation is bad for competition. That’s my understanding of the book business. And I have been around it for 50 years," the author said.
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US District Judge Florence Pan accepted the argument that some writers would likely be harmed if Penguin Random House, the world’s largest consumer-book publisher, was allowed to acquire another of the five largest book publishers in the US, the WSJ said.
The judge, an appointee of President Biden, did not make her full ruling immediately available for public view because she said it contained confidential business information, the newspaper added.
The ruling follows the August trial in Washington DC, where Assistant Attorney General Jonathan Kanter, the Justice Department’s top antitrust official, said the publishing merger would have decreased author compensation and “diminished the breadth, depth and diversity of our stories and ideas", the newspaper said.
German media company Bertelsmann SE, whose holdings include Penguin Random House, agreed to the Simon & Schuster acquisition in November 2020. Bertelsmann said on Tuesday that it would appeal the ruling. “We do not share the court’s assessment, any more than we previously shared the Department of Justice’s position,” chief executive Thomas Rabe said in a statement, the WSJ reported.
The Justice Department had warned that the combined company would control approximately 49% of the market for anticipated top-selling books. Penguin Random House and Simon & Schuster estimated the size of that market at roughly 1,200 books annually, or 2% of all books published by commercial publishers.
HarperCollins bid unsuccessfully for Simon & Schuster after it was put up for sale by Paramount Global in March 2020.
Contact the author at jon.hopkins@proactiveinvestors.com