Stephen King fights for US government in case against book publishing mega-merger

WASHINGTON, Aug 1 (Reuters) – The U.S. Justice Department will ask a federal judge on Monday to block a $2.2 billion merger between two of the “Big Five” book publishers, Penguin Random House and Simon & Schuster, at a scheduled trial. to feature the testimony of horror writer Stephen King.

Also on Monday, in the same federal courthouse in Washington, the Justice Department will argue before another judge that UnitedHealth Group’s (UNH.N) $8 billion deal to buy Change Healthcare (CHNG.O) should to be arrested. Read more

In the publisher merger lawsuit, the government focused not on what consumers pay for books, but on advances paid to top performing authors, particularly those who received $250,000 or more.

“Evidence will show that the proposed merger would likely result in the authors of the projected top-selling books receiving smaller advances, which means that authors who work for years on their manuscripts will be paid less for their efforts,” said the government said in a pre-trial brief.

The government also intends to show that the merging parties feared the deal was legal. He previously leaked 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 out, but that’s assuming we let’s still have a Department of Justice.”

King, author of “The Shining,” “Carrie” and other blockbusters, will testify for the government, alongside publishing executives and authors’ agents.

Penguin Random House, the largest book publisher in the United States, announced plans to buy rival Simon & Schuster in November 2020. Penguin Random House is owned by German media conglomerate Bertelsmann (BTGGg.F). Simon & Schuster is owned by ViacomCBS, now Paramount Global (PARA.O). The Ministry of Justice filed its complaint in November 2021. read more

The defense, led by attorney Daniel Petrocelli who defeated the Trump administration’s 2018 bid to stop AT&T Inc (TN) from buying Time Warner, will argue that the book market and publishers are winning over authors best-selling, is competitive and that the merger will make it even more so.

Publishers will likely argue that evidence shows that in auctions for potential bestsellers, Penguin Random House and Simon & Schuster “are rarely the top two bidders”.

The top five publishers are Penguin Random House, HarperCollins, Macmillan, Simon & Schuster and Hachette, with Walt Disney Co (DIS.N) and Amazon.com Inc (AMZN.O) also in the market. HarperCollins is owned by News Corp (NWSA.O).

Judge Florence Pan of the U.S. District Court for the District of Columbia will decide whether the deal can go forward. The trial is expected to last two to three weeks.

Reporting by Diane Bartz in Washington Editing by David Shepardson and Matthew Lewis

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