Judge stops merger of Penguin Random House, Simon & Schuster
The Justice Department said the merger would reduce competition
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A U.S. judge blocked the $2.2 billion merger of Penguin Random House and rival Simon & Schuster, agreeing with the Justice Department that the joining could "lessen competition" for "top-selling books."
In a Monday brief, U.S. District Court Judge Florence Pan said that much of her ruling remained under seal at the moment because of "confidential information" and "highly confidential information."
The DOJ had argued the merger should be stopped because it would lead to less competition for blockbuster books and lower advances for authors who earn $250,000 or more.
Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division said in a statement that the merger would reduce competition, decrease author compensation, diminish the breadth, depth, and diversity of stories and ideas and "[impoverish] our democracy."
He said the judge's action was a victory for authors, readers and the free exchange of ideas.
Penguin Random House told FOX Business in an emailed statement on Tuesday that it would "immediately request an expedited appeal," calling the decision an "unfortunate setback for readers and authors."
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"We believe this merger will be pro-competitive, and we will continue to work closely with Paramount and Simon & Schuster on next steps," the company added.
The Penguin logo is visible on the spines of books displayed on a shelf at Book Passage on Nov. 2, 2021, in Corte Madera, California. (Photo by Justin Sullivan/Getty Images / Getty Images)
Pan's finding was not surprising — through much of the 3-week trial in August she had indicated agreement with the Justice Department's contention that Penguin Random House's plan to buy Simon & Schuster, for $2.2 billion, might damage a vital cultural industry.
In a company memo shared with The Associated Press, Simon & Schuster CEO Jonathan Karp sought to reassure employees that "despite this news, our company continues to thrive. We are more successful and valuable today than we have ever been, thanks to the efforts of all of you on behalf of our many magnificent authors."
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A book published by Simon & Schuster is displayed on Saturday, July 30, 2022, in Tigard, Oregon. On Monday, Oct. 31, 2022, a federal judge blocked Penguin Random House's proposed purchase of Simon & Schuster. (AP Photo/Jenny Kane, File / AP Newsroom)
Penguin Random House and Bertelsmann would be required to pay a termination fee of approximately $200 million to Paramount Global — Simon & Schuster's corporate parent — should the merger fall through.
President Obama presents author Stephen King, pictured, with the 2014 National Medal of Arts at The White House on September 10, 2015, in Washington, D.C. (Photo by Leigh Vogel/WireImage / Getty Images)
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Stephen King, one of Simon & Schuster's signature writers tweeted that he was "delighted" by the ruling.
"The proposed merger was never about readers and writers; it was about preserving (and growing) PRH's market share. In other words: $$$," he said.
Reuters and The Associated Press contributed to this report.