Penguin-Simon & Schuster deal officially ends
Paramount Global, the corporate parent of the publishing business Simon & Schuster, has officially ended the agreement for Penguin Random House to purchase the publisher for USD 2.2-billion.
23 Nov 2022 | By PrintWeek Team
Earlier on 1 November, a US federal judge had blocked Penguin Random House’s proposed purchase of Simon & Schuster, agreeing with the Justice Department that the joining of two of the world's biggest publishers could lessen competition for top-selling books.
German media group Bertelsmann, which owns Penguin, was unable to convince Paramount Global to help launch an appeal and extend the deal contract before it expires, a source said.
Bertelsmann will owe Paramount a USD 200-million break-up fee as a result of the transaction falling apart.
The US Justice Department had sued to stop the tie-up of the two publishers, which combined would have accounted for more than 25% of all print books sold in the United States this year.
In its complaint, it argued the deal would lead to lower earnings for authors because of the reduced competition. Best-selling author Stephen King testified in favour of the government's arguments during the trial.
The “Big Five” book publishers control 90% of the market. This lack of competition increases prices for consumers and decreases earnings for authors — while enriching a privileged few.
DOJ's antitrust chief Jonathan Kanter said the DOJ is "pleased" the two parties won't appeal. “The district court’s decision is a victory for authors, the marketplace of ideas, consumers, and competitive markets," he said in a statement.
Following the collapse of the deal, Paramount will be free to explore a sale of Simon & Schuster anew. Previously known as ViacomCBS, Paramount had inked the Penguin deal so it could focus on its video and streaming businesses.
HarperCollins, which is controlled by News Corp, and Lagardere's Hachette Book Group have previously expressed interest publicly in buying Simon & Schuster.
HarperCollins also unsuccessfully bid for Simon & Schuster when it was put up for sale by Paramount in early 2020.