USA Sues to Block Penguin Random House Buying Simon & Schuster

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The US Department of Justice has announced it is suing to block a two billion dollar deal over German media giant Bertelsmann’s Penguin Random House, the largest publisher in the world, buying US publisher Simon & Schuster, from ViacomCBS. Or in comic book terms, see the exclusive distributor of DC Comics, Dark Horse and IDW graphic novels to bookstores and the exclusive distributor of Marvel comics to comic shops, Penguin Random House, buy the exclusive distributor of Boom Studios, Oni Press, and Rebellion to US bookstores, Simon & Schuster. Creating a mega-publisher and distributor of books – and comics.

Penguin Random House Buys Simon & Schuster For Over $2 Billion
Penguin Random House Buys Simon & Schuster For Over $2 Billion

An antitrust suit was filed yesterday in the District of Columbia against Penguin Random House stating that “Books have shaped American public life throughout our nation’s history, and authors are the lifeblood of book publishing in America. But just five publishers control the U.S. publishing industry the deal” and that  “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 antic11ompetitive merger – lower advances for authors and ultimately fewer books and less variety for consumers” adding that it “would enable Penguin Random House, which is already the largest book publisher in the world, to exert outsized influence over which books are published in the United States and how much authors are paid for their work…

The complaint alleges that the acquisition of Simon & Schuster for $2.175 billion would put Penguin Random House in control of close to half the market for acquiring publishing rights to anticipated top-selling books, leaving hundreds of individual authors with fewer options and less leverage. According to its own documents as described in the complaint, Penguin Random House views the U.S. publishing market as an ‘oligopoly’ and its acquisition of Simon & Schuster is intended to ‘cement’ its position as the dominant publisher in the United States… Simply put, if Penguin Random House acquires Simon & Schuster, the two publishers will stop competing against each other. As a result, authors will be paid less for their work. Authors who are paid less write less, which, in turn, means that the quantity and variety of books diminishes too.”

In a statement, Penguin Random House and Simon & Schuster stated that they would fight the lawsuit which would harm authors with their lawyer Daniel Petrocelli stating that “DoJ’s lawsuit is wrong on the facts, the law, and public policy. Importantly, DoJ has not found, nor does it allege, that the combination will reduce competition in the sale of books” and that “blocking the transaction would harm the very authors D.O.J. purports to protect.”

The US Attorney General, Merrick Garland, said in a statement. “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.”

Penguin Random House is already the largest book publisher in the United States, owned by German media conglomerate Bertelsmann. Simon & Schuster is the third-largest publisher –  their combined size will dwarf all others. This follows other moves that began with 2013’s merger of Penguin and Random House in 2013, News Corp buying Harlequin, Hachette buying Perseus Books and Houghton Mifflin Harcourt looking to sell its trade publishing division. Simon & Schuster was first put up for sale in March this year, before the pandemic hit, but still made a $115 million profit up to September this year. Originally a crossword publisher in 1924, it grew into a major publisher with many famous names under its belt. But the sale by ViacomCBS will help that business with its current $21 billion debt, and also align Simon & Schuster with a business that actually values books…

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