Judge Blocks Merger Between Penguin Random House and Simon & Schuster

A federal judge blocked Penguin Random House’s purchase of Simon & Schuster. The merge between two of the biggest book publishers would’ve changed the publishing industry.

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The US’s top and biggest publishing houses are also known as the “Big Five.” Among those five, it includes Penguin Random House and Simon & Schuster.

The trial occurred after Penguin Random House made a bid of more than $2 billion to purchase Simon & Schuster. This case became the government’s example of its approach to curbing consolidation. As the two publishers are part of the five major publishing houses, the merger would mean they would ultimately dominate the entire industry. In the end, Judge Florence Y. Pan made the decision to block this purchase. She believed the merger would harm competition for publishing rights of possible top-selling books within the U.S market.

Logo of Penguin Random House and Simon & Schuster
IMAGES VIA PINTEREST

Meanwhile, Penguin Random House plans to repeal the block made. They released a statement afterward that contradicted what Pan said. According to the New York Times, they stated,

“We strongly disagree with today’s decision, which is an unfortunate setback for readers and authors, and we will immediately request an expedited appeal,” Penguin Random House said in a statement.

Penguin Random House, New York Times

They continued,

“As we demonstrated throughout the trial, the Department of Justice’s focus on advances to the world’s best-paid authors instead of consumers or the intense competitiveness in the publishing sector runs contrary to its mission to ensure fair competition. We believe this merger will be pro-competitive, and we will continue to work closely with Paramount and Simon & Schuster on next steps.”

Penguin Random House, New York Times

Stephen King Testifies in the Trial

Stephen King testifies in the Penguin Random House and Simon & Schuster trial alongside others in the publishing industry
IMAGE VIA STEPHENKING.COM

Executives from both Penguin Random House and Simon & Schuster stated during the trial how the merger would benefit writers. They also believe it would be more cost-saving. Then, executives from Hachette and HarperCollins, who are also part of the “Big Five,” testified as well. However, they are against the merger, because authors would have fewer options to publish their work. 

The trial also had authors testifying including Stephen King, a best-selling horror writer whose main publisher is Simon & Schuster. According to Variety, King is strongly against the merger. He believes it is bad for competition and even makes it harder for writers to earn money. Through an email interview with the New York Times, he wrote,

“Further consolidation would have caused slow but steady damage to writers, readers, independent booksellers, and small publishing companies,” he said. “Publishing should be more focused on cultural growth and literary achievement and less on corporate balance sheets.”

Stephen King, New York Times

After Judge Pan made the decision to block the merger, King shared his thoughts on Twitter.

TWEET VIA TWITTER

The Impact of the Trial

The ruling is seen as a win for both authors and readers by the Justice Department. Therefore, Jonathan Kanter of the department’s antitrust division stated,

“The proposed merger would have reduced competition, decreased author compensation, diminished the breadth, depth, and diversity of our stories and ideas, and ultimately impoverished our democracy”

Assistant Attorney General Jonathan Kanter, New York Times

Overall, the merger between Penguin Random House and Simon & Schuster would’ve heavily changed the publishing industry. The Justice Department’s decision emphasizes the antitrust laws, which are meant to protect the overall market and ensure fair competition. Blocking the merger potentially means future merges will be strictly investigated for not only the publishing industry but for big companies in other industries as well.

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