It was the deal that even frightened Stephen King.
The best-selling horror novel writer took to Twitter on Halloween to express his support for a court ruling blocking Paramount Global's proposed sale of Simon & Schuster to the parent of Penguin Random House.
"I am delighted that Judge Florence Pan has blocked the merger of Penguin Random House and Simon & Schuster," King tweeted. "The proposed merger was never about readers and writers; it was about preserving (and growing) PRH's market share. In other words: $$$"
King, author of such modern horror classics as "Salem's Lot," "It" and "The Shining," testified against the proposed merger during a 13-day trial in August in the U.S. District Court for the District of Columbia.
'Outsized Influence'
The U.S. Justice Department had filed the antitrust lawsuit in November 2021, arguing that the proposed deal would enable Penguin Random House, the world’s largest book publisher, to "exert outsized influence over which books are published in the U.S.”
The government had argued that the merger would enable the two companies to jointly control more than two-thirds of the publishing-rights market and thus not have to compete to offer larger advances to authors.
U.S. Circuit Court Judge Florence Y. Pan wrote in her decision that "upon review of the extensive record and careful consideration of the parties' arguments, the Court finds that the United States has shown that 'the effect of [the proposed merger] may be substantially to lessen competition' in the market for the U.S. publishing rights to anticipated top-selling books."
ViacomCBS—before it renamed itself Paramount Global—said in November 2020 that the German media giant Bertelsmann would acquire Simon & Schuster.
Author and electronic publishing analyst Thad McIlroy said that the ruling wasn't "a slam dunk, but the general feeling around the industry is that this would be the outcome."
"One of the interesting things that the trial revealed is that PRH has been struggling for some time to grow, and also that it has lost marketshare in genre publishing to self-published authors," he said. "The big authors may get most of the press and review attention, but the future of publishing is about what happens to all of those authors who are not in the top ranks -- that's where the innovative future of publishing is being written."
The Authors Guild celebrated the ruling, tweeting that "this is the first time a court has recognized what we have been arguing for decades—that consolidation among publishers hurts authors."
"If successful, the merger would have drastically cut competition in the publishing market," the guild said in a follow-up tweet. "According to the economist Nicholas Hill, who testified as the DOJ’s expert witness during the trial, the merged entity would have had a 49% market share."
'Strongly Disagree with the Decision'
Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division said in a statement that the ruling "protects vital competition for books and is a victory for authors, readers, and the free exchange of ideas."
“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,” Kanter said.
He added that "the decision is also a victory for workers more broadly."
“It reaffirms that the antitrust laws protect competition for the acquisition of goods and services from workers," Kanter said.
However, Penguin Random House let it be known that the book is not quite closed on the merger.
In a statement, the company said it "strongly disagree with the decision, which is an unfortunate setback for readers and authors, and we will immediately request an expedited appeal."
"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," the publisher said.
"We believe this merger will be pro-competitive, and we will continue to work closely with Paramount and Simon & Schuster on next steps," the statement concluded.
