Monday, as lawyers for Penguin Random House and the Justice Department were sharpening their sabers ahead of the summer’s antitrust clash, CEO said Jonathan Karp sent an email to his roughly 1,500 employees at Simon & Schuster, the nearly 100-year-old publishing house that Karp has run for the past two years. The fate of Simon & Schuster – whose catalog spans from the classics by Fitzgerald and Hemingway , to the mass market gold mines of Stephen King and Mary Higgins Clark, to the recent political blockbusters of Bob Woodward and Mary Trump— has been on the line since the publisher was denounced in March 2020 by its parent company, now called Paramount Global, and stemmed from the tortured recombination of Viacom and CBS, whose focus is on mounting an offensive in the streaming wars little leaves room to run a relatively outdated book publishing company.
Nearly nine months after the sale was announced, Bertelsmann’s PRH Rupert Murdoch‘s HarperCollins with a $2.18 billion bid for S&S, a proposed mash-up that would turn the Big Five publishers into the Big Four. However, the champagne toasts proved premature: last November, Joe BidenThe merger-averse DOJ sued the deal to block the deal, citing concerns it would give the world’s largest book publisher “unprecedented control” over the industry, resulting in “lower claims for authors and ultimately fewer books.” and less variety for consumers,” a series of claims that PRH characterizes as ludicrous. S&S has been in limbo ever since – a discontinued operation as far as Paramount Global’s earnings disclosures go, yet still bereft of the embrace of its worshiper.
Which brings us back to Karp’s memo, a kind of pep talk to counteract the lingering uncertainty. “As I’ve told you before, I’m hopeful that Simon & Schuster will become part of Penguin Random House,” wrote Karp, a 58-year-old former reporter and theater buff who grew up to be one of the world’s most powerful and highly regarded figures. in the publishing industry: “I spent 16 years at Random House, and I know their culture is a lot like ours — committed wholeheartedly to books and deeply committed to its employees and authors. Penguin Random House’s parent company, Bertelsmann, has been in the book world since 1835 and shares Penguin Random House’s deep commitment to improving its public readership.I am confident that Penguin Random House will be an outstanding steward of Simon & Schuster’s legacy, and that we, and our authors, will benefit greatly from being part of this great publishing house.”
The fate of S&S will soon be decided one way or another, with PRH and the DOJ preparing to face off in court. The court will begin Monday, tried by judge. Florence Pano at the US District Court in Washington, DC Three weeks have been set aside for the trial, which will run from August 1 to August 19. The lawyers then have until September 7 to file any additional briefings with the court, and Pan is expected to rule sometime in November. The witness list is filled with A-listers from the publishing industry, including executives from S&S and PRH, as well as top literature agents and authors. Karp and Penguin Random House CEO Markus Dohlea are both mentioned, as is King (for government), CEO of Hachette Book Group Michael Pietsch (ditto), and power agents Andrew Wylie (whose client list includes) Vanity Fair), Gail Ross, Joy Harris, and Elyse Cheney. (Those officers and a few others are specifically called by the defense.) The line of potential witnesses includes PRH honcho Andy Ward and the Pulitzer Prize-winning journalist and bestselling author Charles Duhigg. “During the trial, our ability to comment on the testimony and proceedings will be limited. We will keep you informed of further developments when we have news to share,” Karp told his staff.
PRH buys S&S is a small deal in the grand scheme of things, but the merger is being watched closely to the extent that it reflects pressure from the Biden administration to curb corporate consolidation. It also has clear implications for the already highly consolidated publishing space, where there is skepticism about creating a new behemoth in an industry that has been rocked by Amazon. As a major editor told me when the lawsuit was first announced, “I don’t know anyone who would think this is a great thing to happen.”
Both parties submitted their pre-trial briefs last Friday: “The proposed acquisition of Simon & Schuster by Penguin Random House would further entrench the largest publishing giant in the United States (and the world) and give the merged company control of nearly half of the market for the expected best-selling books by authors,” reads the government’s file. Indeed, the post-merger combined Penguin Random House/Simon & Schuster would share control of 90% of the relevant market with just three other companies. Evidence will show that the proposed merger would likely result in authors of best-selling books expected” – the elite segment of the market in which authors enforce advances of $250,000 and above – “receive smaller advances, meaning authors who spend years working on their manuscripts will be paid less for their efforts and fewer authors will be able to earn a living earn by writing.’ (Ironically, the government seems to be on the lookout for the big man.) This transaction would eliminate competition between two of the last remaining major publishers: Penguin Random House and Simon & Schuster are legendary companies responsible for publishing some of the most prized works of fiction and non-fiction in the history of this country. to win the rights to publish expected best-selling books. The evidence will show that many authors have benefited from this competition, which would disappear if the proposed merger went through, which would likely lead to lower advances and worse contract terms for authors.
