Stephen King will strike in favor of the US government in a case against book publishing and mass merger

WASHINGTON (Reuters) – The U.S. Department of Justice asked 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 draw distinctive testimony from horror writer Stephen King.

“It’s real money for real people,” said John Reed, an attorney for the Department of Justice.

Also Monday, in the same Washington federal court, the Department of Justice argued before a different judge that UnitedHealth’s (OH.N) $8 billion deal to buy Change Healthcare (CHNG.O) It must stop. Read more

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In the publisher consolidation experiment, the government is not focusing 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 projected bestselling 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.

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Michael Beach, CEO of Hachette Book Group, is due to testify on Monday, while King is expected to testify on Tuesday.

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 company Bertelsmann. (BTGGg.F). Simon & Schuster is owned by ViacomCBS, now known as Paramount Global (PARA.O). The Ministry of Justice filed its lawsuit in November 2021. READ MORE

Defense led by attorney Daniel Petrushelli who defeated the Trump administration’s 2018 bid to stop AT&T Inc (Tennessee) From buying Time Warner, he argued that the market for books and publishers to win best-selling authors is a competitive market and that a merger would make it more competitive.

Petroselli said in opening arguments that the government is asking the court to block the merger for “less than 100 books a year,” rejecting the idea that the biggest booksellers would be able to reduce advances.

Publishers will argue that the evidence shows that when bidding for potential bestsellers, Penguin Random House and Simon & Schuster “are rarely the best bidders.”

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

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.

(cover) by Diane Bartz and David Shepardson in Washington. Editing by Matthew Lewis and Mark Porter

Our criteria: Thomson Reuters Trust Principles.

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