Authors Guild Celebrates Court’s Decision to Block Penguin Random House-Simon & Schuster Merger in DOJ’s Antitrust Suit
November 1, 2022
New York (Nov 1, 2022): The Authors Guild, the nation’s oldest and largest nonprofit advocacy group for authors, celebrates the D.C. District Court’s decision to block the merger of Penguin Random House and Simon & Schuster in an antitrust action initiated by the Department of Justice last November. In a summary order rendering her decision, U.S. District Court Judge Florence Pan wrote that the DOJ had successfully shown that “‘the effect of the proposed merger may be substantially to lessen competition’ in the market for the U.S. publishing rights to anticipated top-selling books.” The full order is under seal pending the parties’ redaction of confidential information.
“This decision is a major victory for authors,” said Authors Guild president Doug Preston. “This is the first time a court has recognized what authors and the Authors Guild have been arguing for decades: that consolidation among publishers hurts authors. It leaves authors with fewer potential buyers of their manuscripts, which restrains their power to negotiate advances and other terms.”
If successful, the merger would have drastically cut competition in the publishing market. According to the economist Nicholas Hill, who testified as the DOJ’s expert witness during trial, the merged entity would have had a 49 percent market share, far greater than its next biggest competitor HarperCollins’ 22 percent. The Authors Guild has cautioned that this degree of market power concentration makes competitive bidding and auctions less likely and drives down what agents are able to negotiate in advances. Publishers also have a greater incentive to spend on book marketing when they must recoup a large advance, which has a substantial impact on visibility and authors’ earning potential.
The Authors Guild has opposed consolidation among publishers going back five decades to the 1970s. Over the decades the Authors Guild has issued reports and statements and testified before Congress in response to the growing trend of large publishers acquiring smaller firms. When the merger between PRH and S&S was announced in 2020, the Guild called for the Department of Justice’s antitrust intervention, pointing out that “the history of publishing consolidation has also taught us that authors are further hurt by such mergers due to editorial layoffs, canceling of contracts, a reduction in diversity among authors and ideas, a more conservative approach to risk-taking, and fewer imprints under which an author may publish.” The Guild voiced its support for the DOJ’s lawsuit and consulted with DOJ attorneys on the merger’s impact on authors. Many of our arguments to the DOJ were reflected in its complaint.
“The consolidation of publishers decreases the overall diversity—in the broadest sense—of books that get published,” stated Authors Guild CEO Mary Rasenberger. “As the DOJ recognized in its complaint, it means that fewer authors will be able to earn a living writing, which impacts their ability to write books. Moreover, every publisher has a unique personality, taste, and risk tolerance. The fewer publishers there are, the fewer ideas and voices are reflected in what gets published. We lose out on authors that present unusual or controversial ideas, those from overlooked and marginalized communities, and literary writers who challenge the status quo both in content and style.
“The decision is particularly exciting for us because it shows that the court understands that monopsonies—the concentration of power among one or a few large buyers—are as harmful to competition as monopolies where sellers control pricing,” Rasenberger continued. “This is particularly true where the suppliers are authors or other creators who have almost no ability to negotiate most terms of their contracts. And in the case of books, it is particularly important since books are so crucial to the exchange of ideas necessary to support democracy.”
The Authors Guild looks forward to reading the full order when published.
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