The U.S. Court Blocks PRH's Acquisition of S&S
By Hannah Collins
On 31 October 2022, Judge Florence Pan blocked Penguin Random House’s acquisition of Simon & Schuster by ruling in favour of the U.S. Department of Justice in its lawsuit to stop the merger on antitrust grounds. After several very high-profile antitrust losses, Biden’s Department of Justice achieved a much-needed win by convincing Judge Pan to block the $2.2 billion merger between the first and fourth largest book publishers in the United States. The deal that rocked the publishing world was first announced in 2020 and was set to reduce the Big Five publishers, which include Penguin Random House, Hachette Book Group, HarperCollins, Macmillan Publishers and Simon & Schuster, to the Big Four.
Since the ruling, Penguin has announced its intention to request an expedited appeal against the decision. Similarly, Jonathan Karp, president and CEO of Simon & Schuster, has declared in a statement to Publishing Perspectives that the company is “reviewing the decision and discussing next steps with Paramount, Bertelsmann and Penguin Random House.” Penguin has also released a statement that aligns with the upset shared by many surrounding the blocking of the merger, announcing that it “strongly disagree[s] with today’s decision, which is an unfortunate setback for readers and authors.” This sentiment is shared by many who believe that the decision, if it is upheld, will have disastrous consequences for the book industry as well as for publishers and consumers, with PRH having to pay a $200 million cancellation fee if the deal falls through.
Jonathan Kanter, Assistant Attorney General of the Department of Justice, disagrees with PRH’s and S&S’s upset over the decision and states that the ruling is “a victory for authors, readers and the free exchange of ideas,” adding that it is also “a victory for workers more broadly.” The Department of Justice continues to stand in opposition to the companies involved in the merger. It claims that the new company would dominate the commercial books market (where author advances could be up to $250,000 and possibly higher) so drastically that the size of advances would go down elsewhere, and the number of releases would decrease.
The publishing world is still unaware of the full extent of Judge Florence Pan’s ruling, as it has not been made public. This is down to the courts claiming that the complete ruling details particular business information that could not be publicly released. However, an edited version is set to be provided over the coming weeks, and everyone involved in the industry will be keeping an eager eye on all aspects of the case that are yet to unfold.