April 17, 2024

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Paramount loses $2.2 billion from selling Simon & Schuster Publications to Penguin | Spread

The owner of Penguin Random House, the world’s largest book publisher, and rival Simon & Schuster said in a statement Monday that it had canceled a $2.2 billion deal to merge.

Bertelsmann, a German media group that owns Penguin, initially said it would appeal A US judge’s decision He said that his purchase of Simon & Schuster would be illegal because it would hurt the authors’ pay.

But Bertelsmann said in a statement on Monday that it would “drive 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 the German company was unable to convince Paramount Global, owner of Simon & Schuster, to extend the deal agreement and appeal the judge’s decision.

Judge Florence Pan of the US District Court for the District of Columbia ruled on October 31 that the Justice Department showed the deal could significantly reduce competition “in the US copyright market for projected bestsellers.”

With the deal dissolved, Penguin will pay Paramount a $200 million termination fee.

On Monday, Paramount said Simon & Schuster was a “non-core asset” to Paramount. “It is not video-based and therefore does not fit strategically with Paramount’s broader portfolio,” the company said in its termination request.

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 He argued that the deal should stop because it would result in less competition for bestsellers and lower achievement for authors earning $250,000 or more.

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The decision comes as the Biden administration has made clear it intends to tackle what it views as monopolistic sites, blaming them for, among other things, soaring meat prices and soaring concert ticket prices.

The book industry has gone through a series of mergers in recent years, and critics fear another major merger could reduce competition while making life more difficult for smaller publishers.

Penguin is already the largest publisher in the United States. Its co-authors include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steel, while Simon & Schuster publishes Stephen King, Jennifer Weiner, Hillary Rodham Clinton, and others.

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

At hearings in August, the government argued that the five largest publishers controlled 90% of the market, and that Penguin and Simon & Schuster combined would control nearly half the market for blockbuster rights, while its closest competitors would have less. . than half its size.

King, author of bestselling books including The Stand and The Shining, was among the authors and agents who testified during the trial, arguing that it would reduce competition.

“You might also say you would have a husband and wife competing against each other for the same house. It’s kind of ridiculous,” King told the court. “Unification is harmful to competition.”

Reuters contributed to this story