Judge Blocks Penguin Random House and Simon & Schuster’s $2 Billion Merger

by IS_Indust
Judge Blocks Penguin Random House

Penguin Random House and Simon & Schuster

The world’s two most influential book publishers, Simon & Schuster of Paramount Global and Penguin Random House, had planned to merge for $2.18 billion. However, federal judge Florence Pan concurred with the American antitrust regulators and halted the deal.

After a 13-day trial that finished in August and featured prominent testimony from author Stephen King for the government, the decision to prevent the merger between the fourth and fifth-largest publishers was made. The government asserted that the agreement would have reduced competition in the market for book rights, cutting writers’ compensation and narrowing the options available to consumers. The publishers responded by arguing that the agreement would have allowed them to compete with the digital behemoths Disney and Amazon.

According to the DOJ, removing the firms’ head-to-head competition to secure manuscripts through larger author advances lower advances, which in turn reduces the amount and variety of books available to customers. They added that the necessity for additional large publishing houses was due to the fact that smaller houses lacked their services and couldn’t assume the risks associated with large advances.

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