Stephen King goes to bat for the US government in a case against book publishing and massive merger

Written by Diane Bartz

WASHINGTON (Reuters) – The US Justice Department will ask a federal judge on Monday to block the merger of two “Big Five” book publishers, Penguin Random House and Simon & Schuster, in a trial expected to include testimony. From horror writer Stephen King.

Also Monday, in the same Washington federal court, the Department of Justice will argue before a different judge that UnitedHealth Group’s $8 billion deal to buy Change Healthcare should stop.

In the publisher consolidation experiment, the government has focused not on what consumers pay for books but on advances paid to the most successful authors, especially those with $250,000 or more.

“Evidence will show that the proposed merger will likely result in expected bestseller authors receiving smaller upfront payments, meaning that authors who work for years on their manuscripts will be paid less for their efforts,” the government said in a pre-trial brief.

The government also intends to show that there are concerns among the merging parties that the deal is illegal. It previously revealed an email sent by Simon & Schuster CEO Jonathan Karp, who wrote: “I’m pretty sure the Department of Justice won’t allow Penguin Random House to buy us, but that’s assuming we still have the Department of Justice.”

King, author of “The Shining,” “Carrie” and other blockbuster films, will testify to the government, along with publishing executives and author agents.

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

The defense, led by attorney Daniel Petroselli who defeated the Trump administration’s 2018 attempt to prevent AT&T Inc from buying Time Warner, will argue the book market, and for publishers to win best-selling authors, is competitive and the merger will make it successful. Furthermore.

Publishers are likely to argue that evidence shows that in bidding on Penguin Random House and Simon & Schuster “are seldom the largest bidder”.

The top five publishers are Penguin Random House, HarperCollins, Macmillan, Simon & Schuster, and Hachette, with Walt Disney Co and Inc also on the market. HarperCollins is owned by News Corp.

U.S. District Judge Florence Bane for the District of Columbia will decide whether the deal can go ahead. 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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