Will The Major Book Merger Happen?

The Department of Justice has filed a lawsuit against Penguin Random House and Simon & Schuster over the proposed merger of the two major publishing houses. In the lawsuit, the DOJ makes clear that this merger would hurt authors and the public, particularly focusing on best selling authors.

If this merger goes through, Penguin Random House will control more than half of the U.S. book market for acquisitions and their next closest competitor would be less than half their size. Collectively, the two companies would control more than two thirds of the entire market, creating an anticompetitive landscape.

Best-selling horror author Stephen King has raised his voice and testified against Penguin Random House’s proposed $2.18 billion acquisition of Simon & Schuster, saying it would weaken competition in the publishing industry. He has also said consolidation in the publishing industry over the course of his career has led to lower pay for authors.

“It becomes tougher and tougher for writers to find enough money to live on,” King testified in federal court in Washington. Much of King’s testimony focused on difficulties he perceived for less well-known authors. He said the five biggest publishers (Penguin/Random House, Hachette Book Group, Harper Collins, Simon and Schuster, Macmillan) have largely squeezed out independent shops, making it harder for fledgling authors to make it into print.

If completed, the deal would see Penguin, the largest book publisher and a unit of Bertelsmann SE, take over Simon & Schuster, the fourth biggest. The government argues the combination will lead to lower advances for authors and fewer choices for consumers.

The trial, which is expected to last three weeks, comes as the Biden administration has taken a tougher stance against a trend of consolidation within industries.

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