US judge blocks Penguin Random House $2.2b book merger

The largest book publisher in the world, Penguin Random House, and rival Simon & Schuster cannot combine for $2.2 billion, a US judge has declared.

Judge Florence Pan of the US District Court for the District of Columbia, said in a brief order on Monday that she found the Justice Department had shown the deal may substantially lessen competition “in the market for the US publishing rights to anticipated top-selling books.”

Unlike most merger fights, which are focused on what consumers pay, this one focused on authors’ earnings. The government argued the deal should be stopped because it would lead to less competition for blockbuster books and lower advances for authors who earn $250,000 or more.

Penguin Random House said the decision was “unfortunate,” and said it would “immediately request an expedited appeal.”

“A merger would be good for competition,” said Thomas Rabe, chief executive of Penguin owner Bertelsmann (BTGGg.F), who said the court’s decision was based on incorrect basic assumptions.

Penguin writers include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele, while Simon & Schuster publishes Stephen King, Jennifer Weiner and Hillary Rodham Clinton, among others.

Penguin is owned by Bertelsmann, a German media group, while Paramount Global (PARA.O) owns Simon & Schuster.

“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,” US Assistant Attorney General Jonathan Kanter said in a statement.

The US Justice Department had filed a lawsuit aimed at stopping the deal in November 2021. 

The top five publishers are Penguin Random House, HarperCollins, Macmillan, Simon & Schuster and Hachette, with Walt Disney Co (DIS.N) and Inc (AMZN.O) also in the market. HarperCollins is owned by News Corp (NWSA.O).


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