US sues Penguin Random House over plans to acquire Simon & Schuster

The U.S. Justice Department is seeking to block Penguin Random House, the world’s largest publisher, from acquiring rival publisher Simon & Schuster, the fourth largest in the United States.

An antitrust lawsuit filed Tuesday in federal court warns that such an acquisition would hurt competition for top-selling manuscripts. A slimmer, more tightly controlled publishing industry would leave authors with fewer options and allow a newly consolidated Penguin Random House to get away with offering writers less for their work, according to the Justice Department.

“Authors are the lifeblood of book publishing. Without authors, there would be no stories; no poetry; no biographies; no written discourse on history, arts, culture, society, or politics,” the department’s complaint reads. “Penguin Random House’s proposed acquisition of Simon & Schuster would result in substantial harm to authors, particularly authors of anticipated top-selling books.”

The pending acquisition is valued at nearly $2.2 billion.

Five publishers, known as the “Big Five,” dominate the publishing industry. They offer high advances and attractive marketing for highly anticipated manuscripts, and compete with one another for the next biggest deal.

The antitrust suit marks an unusually bold move in a highly consolidated industry. Publishing companies Penguin Group and Random House merged without problems in 2013.

“If the world’s largest book publisher is permitted to acquire one of its biggest rivals, it will have unprecedented control over this important industry,” U.S. Attorney General Merrick Garland said in a department statement.

“American authors and consumers will pay the price of this anticompetitive merger – lower advances for authors and ultimately fewer books and less variety for consumers.”

Jonathan Karp, Simon & Schuster’s president and chief executive officer, disagrees with the department’s complaint. In an internal memo sent to Simon & Schuster employees Tuesday, Karp wrote that his company and Penguin Random House see no basis for the lawsuit and that they plan to fight it.

The New York Times reports that Penguin Random House has hired lawyer Daniel Petrocelli, who helped AT&T and Time Warner fight a Justice Department antitrust lawsuit.

Penguin Random House did not respond to VOA’s request for comment. (VOA)