HomeBusinessParamount scraps $2.2bn sale of Simon & Schuster publishing to Penguin |...

Paramount scraps $2.2bn sale of Simon & Schuster publishing to Penguin | Publishing

Penguin Random House, the world’s largest book publisher, and rival Simon & Schuster have scrapped a $2.2 billion deal to merge, Penguin’s owner said in a statement Monday.

Bertelsmann, a German media group that owns Penguin, initially said it would appeal against a The decision of the American court that said the purchase of Simon & Schuster would be illegal because it would hit authors’ wages.

But Bertelsmann said in a statement Monday that it will “promote the growth of its global book publishing business without the previously planned merger of Penguin Random House and Simon & Schuster.”

Reuters reported on Sunday that German company Paramount Global was unable to convince the owner of Simon & Schuster to renew their agreement and appeal the judge’s decision.

Judge Florence Pan of the U.S. District Court for the District of Columbia ruled on Oct. 31 that the Justice Department had shown that the deal could significantly reduce competition “in the market for U.S. publishing rights for anticipated bestselling books.”

With the deal being terminated, Penguin will pay a $200 million termination fee to Paramount.

Paramount said Monday that Simon & Schuster was a “non-core asset” for Paramount. “It is not video-based and therefore strategically does not fit into Paramount’s broader portfolio,” the company said in a deal termination document.

The Justice Department did not immediately respond to a request for comment.

Unlike most merger battles, which focus on what consumers pay, the Biden administration argued that the deal should be dropped because it would lead to less competition for blockbuster books and lower advances for authors earning $250,000 or more.

The decision comes after the Biden administration has made it clear that it intends to crack down on what it considers monopolies, blaming them for rising meat prices and soaring concert ticket prices, among other things.

The book industry has gone through a series of consolidations in recent years, and critics feared another major merger would reduce competition and make life harder for smaller publishers.

Penguin is already by far the largest US publisher. Its writers include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steel, while Simon & Schuster publishes Stephen King, Jennifer Weiner, and Hillary Rodham Clinton, among others.

The US Department of Justice has filed a lawsuit to stop the deal in November 2021.

In hearings in August, the government argued that the top five publishers control 90% of the market and that a combination of Penguin and Simon & Schuster would control nearly half of the market for publishing rights to blockbuster books, while its closest competitors would be less than half its size.

King, author of bestsellers including The Stand and The Shining, was among the authors and agents who testified at the trial, arguing it would reduce competition.

‘You might as well say that husband and wife are bidding against each other for the same house. It’s kind of ridiculous,” King told the court. “Consolidation is bad for competition.”

Reuters contributed to this story

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