Penguin Random House’s deal to buy rival Simon & Schuster for $2.18 billion was blocked by a federal judge who found the merger would lessen competition, reported the Wall Street Journal.
Unlike most merger fights, which are focused on what consumers pay, this one focused on authors’ earnings. The government argued the deal should be stopped because it would lead to less competition for blockbuster books and lower advances for authors who earn $250,000 or more.
Judge Florence Pan of the US District Court for the District of Columbia said in a brief order that she had found the Justice Department had shown the deal may substantially lessen competition “in the market for the US publishing rights to anticipated top-selling books.”
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Penguin writers include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele, while Simon & Schuster publishes Stephen King, Jennifer Weiner and Hillary Rodham Clinton, among others.The US Justice Department had filed a lawsuit aimed at stopping the deal in November.
In hearings held in August, the government argued that the largest five publishers control 90% of the market, and a combined Penguin and Simon & Schuster would control nearly half of the market for publishing rights to blockbuster books while its nearest competitors would be less than half its size.
