The Biden administration on Tuesday sued to stop Penguin Random House, the largest publisher in the United States, from acquiring its rival Simon & Schuster. The resulting publishing company would dwarf the rest of the industry.

There aren’t many publishers left. Most of the books that aren’t indie press are published by a handful of giant corporations as it is. Penguin Random House, with its more than 300 imprints and 15,000 new releases a year, dwarfs the other four major U.S. publishers. If they get their way, their merger with Simon & Schuster will give them control over more than 27% of the entire publishing industry.

Tuesday’s antitrust lawsuit, filed in the United States District Court for the District of Columbia, argues that because the two publishers are often the final bidders on the same books, that the lack of competition between them would hurt authors by lowering advances, and consumers by sharply reducing the choices at the bookstores. The lawsuit focuses on the market for book rights publishers think will be top sellers, and bidding wars between the two companies that sometimes go into the millions of dollars.

Penguin Random House plans to fight the suit, of course, and the two publishers issued a joint statement to the effect that they had no plans to reduce either the number of books bought or what they pay for them. The government’s argument is that if they go back on their word and the merger goes through, that there would be no consequences for doing that.

Markus Dohle, chief executive of Penguin Random House, in 2019.
Credit…John Macdougall/Agence France-Presse — Getty Images

Penguin Random House, which is owned by the German media conglomerate Bertelsmann, has said that it and Simon & Schuster together would account for less than 20 percent of the United States’ general-interest publishing revenue.

That data is drawn from the Association of American Publishers, a trade association, which looks at the complete book market in the United States. NPD BookScan, which tracks printed books sold through most U.S. retailers, said that the market share of the two publishers was significantly higher, at about 27 percent of books that sold in the first nine months of this year.

“Nobody likes to work in an atmosphere of uncertainty,” Simon & Schuster’s chief executive, Jonathan Karp, told employees on Tuesday. “We will carry on as the creative and industrious jewel of the publishing industry that made us attractive to buyers in the first place.”

Simon & Schuster’s chief executive Jonathan Karp

No matter what happens, ViacomCBS, the current owner of Simon & Schuster, still plans to sell off the publisher, but it isn’t immediately clear who would buy it if Penguin Random House doesn’t.

In a memo to Simon & Schuster employees, Jonathan Karp, its chief executive, sought to reassure his staff.

“For all of us, this news is unsettling: Nobody likes to work in an atmosphere of uncertainty,” he wrote. “We will carry on as the creative and industrious jewel of the publishing industry that made us attractive to buyers in the first place.”


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