DOJ officials bring book publishers to court amid antitrust concerns
Yahoo Finance legal reporter Alexis Keenan highlights a Department of Justice anti-trust probe into book publishers Penguin Random House and Simon & Schuster over their merger.
Video Transcript
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DAVID BRIGGS: The multibillion-dollar book publishing industry is dominated by a handful of companies often referred to as the "Big Five." But that could soon be cut to just four major publishers, depending upon the outcome of an antitrust trial that begins today over the $2.2 billion merger of Penguin Random House and Simon & Schuster.
Yahoo Finance's Alexis Keenan here with us on this lawsuit. What's the central argument here?
ALEXIS KEENAN: So it's a strange one. This is the Justice Department saying that this $2.2 billion merger should not happen. And first, you have to take into account that Penguin Random House is the world's largest publisher, and they want to go after Simon & Schuster. So this lawsuit is against both of them.
And what's odd about the argument is that-- and it was-- this was pointed out, reportedly, already in the case in the opening statements in the trial that started today, saying that the market that the DOJ is going after is this narrow market, and it's the one called-- that they're calling, where publishers compete for the rights to anticipated top-selling books. The argument is that post-merger, that these two companies would control about 49% of that market. And I think we have a graph to show that-- on the left-hand bar, if we've got it, that would show that the combined post-merger 49%.
But basically, it would double the next post-merger largest company, which would be HarperCollins in that case. So the DOJ is saying that if this merger happens, you're going to have two problems. One is these top paid authors, that they're going to be paid less in their advances for these books, which are often their full compensation. And that, secondly, consumers are going to have fewer book choices. But a very narrow, narrow argument here and one that's probably going to be a little bit difficult to win.
SEANA SMITH: Yeah, we know the Biden administration hasn't exactly been open to these cases. They've really taken a hard stance.
