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US court to decide on publishing giants' merger deal

2022-08-02 HKT 00:45
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  • Books from publishers including Penguin Random House and merger target Simon & Schuster. Photo: AP
    Books from publishers including Penguin Random House and merger target Simon & Schuster. Photo: AP
The US Justice Department asked a federal judge on Monday to block a US$2.2 billion merger of two of the "Big Five" book publishers, Penguin Random House and Simon & Schuster, in a trial that is expected to feature testimony from horror writer Stephen King.

"It's real money for real people," said Justice Department attorney John Read.

Also on Monday, in the same federal court in Washington, the Justice Department argued before a different judge that UnitedHealth Group's US$8 billion deal to buy Change Healthcare should be stopped.

In the publisher merger trial, the government is focused not on what consumers pay for books but on advances paid to the most successful authors, especially those given US$250,000 or more.

"The evidence will show that the proposed merger would likely result in authors of anticipated top-selling books receiving smaller advances, meaning authors who labour for years over their manuscripts will be paid less for their efforts," the government said in a pretrial brief.

The government also intends to show that there was concern among the merging parties that the deal is not legal. It previously disclosed an email sent by Simon & Schuster CEO Jonathan Karp who wrote: "I'm pretty sure the Department of Justice wouldn't allow Penguin Random House to buy us, but that's assuming we still have a Department of Justice."

King, author of "The Shining," "Carrie" and other blockbusters, will testify for the government, along with publishing executives and authors' agents.

Hachette Book Group CEO Michael Pietsch is set to testify on Monday, while King is expected to testify on Tuesday.

Penguin Random House, the largest book publisher in the United States, said it planned to buy rival Simon & Schuster in November 2020. Penguin Random House is owned by German media conglomerate Bertelsmann. Simon & Schuster is owned by ViacomCBS, now Paramount Global. The Justice Department filed its lawsuit in November 2021.

Judge Florence Pan of the US District Court for the District of Columbia will decide if the deal may go forward. The trial is expected to last two to three weeks. (Reuters)