Last week, the publishing trial of the century kicked off in Washington, DC to determine whether Penguin Random House (PRH) will be allowed to purchase Simon & Schuster (S&S) from Paramount Global for $2.2 billion dollars. President Biden’s Department of Justice filed suit to block the deal in November 2021 as part of a broader effort to enhance antitrust enforcement. The DOJ is arguing that the merger “will cede nearly 50% of the market for anticipated top-selling books to the combined firm, which will harm competition by lowering author advances and diminishing output, creativity, and diversity.” In a nutshell: PRHSS (name pending) would be bad for competition, and thereby detrimental to both authors and customers.
PRH and S&S argue that combining their resources would not hurt competition and would in fact allow PRH to make higher offers overall, thus encouraging competitive advances from other members of the Big Five (well, four), as well as independent publishers like Scholastic and Workman.
During the first week of the trial (which is still ongoing), we heard testimony from witnesses on both sides, including S&S CEO Jonathan Karp, PRH CEO Markus Dohle, and bestselling S&S author Stephen King (for whom I once bought a sandwich as a publicity assistant). There were several gasp-worthy moments from these publishing power players who spilled more industry tea than at the National Book Awards afterparty. If you want to get a more granular picture of what’s going on in the trial, I recommend reading Publishers Weekly News Editor John Maher’s epic Twitter thread, which recounts a play-by-play from inside the courthouse.
The amount of money paid by the publisher to an author in advance of their book’s publication. Payments are usually distributed in fourths.
When multiple publishing houses bid against each other to acquire an author’s work.
Books that a publisher keeps in print over time. Frontlist books are newly released titles that come out each season.
When the publisher makes back the amount of the advance from book sales, recouping their initial investment. Once a book “earns out,” authors can earn royalties.
A name under which a book publisher publishes books. Simply put, it’s a subdivision of a larger publishing house.
A term for books that aren’t bestsellers but are still economically viable for the publisher.
The “Big Five”:
The five largest publishing houses: Penguin Random House, Simon & Schuster, Harper Collins, Macmillan, and Hachette.
Having worked in the publishing industry for almost a decade at both S&S and PRH, I’ve been wary of this merger since the news of it first broke in November 2020. Now that I’m no longer employed by one of the companies involved, I can say out loud that I hold major reservations about what it could mean for those still inside the book machine. It turns out that I’m not the only one with concerns. The publishing house employees, authors, and literary agents that I spoke to for this piece all shared feelings of uneasiness about what a PRH/S&S merger would mean both for them as workers and for the industry as a whole.
The DOJ antitrust case focuses largely on how the merger would negatively affect those who make a living from writing. Siva Vaidhyanathan, a writer and professor of Media Studies at the University of Virginia familiar with antitrust law, says that the merger is only going to make things worse for midlist authors like himself who earn out their relatively low advances through slow and steady promotion from attentive publishers. Without long-term grassroots commitment to a book’s success, it’s hard for a midlist title to gain traction in a market where “priority books” (often those where a publisher needs to sell a lot of copies to recoup on a large advance) have marketing dollars, book tours, and paid store placements on their side. The staff reductions that often accompany mergers would mean fewer editors, marketers, and publicists, on the ground hustling for midlist titles.
DOJvPRH Day 1: gov't says "no court has ever approved a merger on a promise quite like this," that imprints at PRH and S&S will be allowed to bid against each other. "the fact that the defense is even making it implies that this merger is a bad deal for authors."
— John Maher (@JohnHMaher) August 1, 2022
“The concentration we have seen in the book industry since 1990 has pushed publishers to double down on star writers, celebrities, and politicians, leaving emerging writers with less support,” Vaidhyanathan observed. It’s not hard to see the consolidation happening; after all, The Big Five was The Big Six less than a decade ago, and now we’re one DOJ case away from it becoming The Big Four. He anticipates that this support will only wither further if the merger goes through. “The bigger the company, the less likely anyone is going to return my emails after eight weeks.”
I spoke with an author who was until recently published by PRH and wishes to remain anonymous; she told me that the marketing and publicizing of midlist authors has already diminished significantly during her career. “Five years ago, when I was debuting, I had an advance that was smallish but standard for a new author at my imprint, and I got marketing and publicity to match,” she shared. “By 2020, the publisher support had almost entirely evaporated for me and so many other midlist authors that I know, both at my imprint and elsewhere.”
This author believes that PRH’s marketing and publicity departments were explicitly told to deprioritize her imprint’s books, and worries what that could mean for the authors at S&S whose imprints might soon be acquired.
Previous PRH mergers, particularly the high-profile merging of Penguin and Random House in 2013, suggest that more consolidation will mean fewer imprints in existence to offer authors a home—and less competition among them to drive up authors’ advances. A literary agent who asked to remain anonymous told me that if the merger goes through, she anticipates shuttered imprints and layoffs across the board. “I think it's strange not many people have mentioned the consolidation and layoffs from [when] Penguin and Random House merged,” she said. As this agent rightfully points out, many of the independent publishers PRH is trying to paint as their competition during this trial were formed only after being fired from PRH when their imprints were shuttered, like Spiegel and Grau, which just relaunched after being closed down in 2019.
Although Karp and Dohle have conveniently left this out of their testimonies, there’s a long track record of how past consolidations have affected authors. One PRH author I spoke with has dealt with the impact of mergers during all three of her publishing experiences, which span more than a decade. Her first book never came out after the contract was canceled when Random House and another publisher combined in 2010; she’s still “bitter” about it to this day. Her other two books have both changed hands under PRH during subsequent mergers.
This author candidly shared that having a book canceled in her twenties was a “devastating” experience that set her career back several years and cost her a lot of money. “If [P]RH’s pattern of the last 20 years holds, there just will be fewer bidders at auction and [more] canceled contracts,” she told me. “That’s just what happens.” Three authors she knows have recently saw their contracts canceled, but they’re afraid to speak up about it for fear of hurting their chances at future publishing opportunities.
In addition to how the merger might affect authors, it’s also likely to have an impact on everyday readers. The FTC’s antitrust laws were explicitly created “to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.” A single company with almost half of the market share would have enormous power over not only the price of books, but also over the production quality and content of the books available to consumers.
“When one company controls most of the market, they can do whatever they want,” an anonymous marketing director who used to work for PRH told me. “Raise prices, crummy production values, terrible terms that make it harder for stores to stay open.” While these predictions may hold true in the long term, Publishers Weekly’s Maher, who has been reporting on the merger, told me last week that prices, at least, are unlikely to go up in the short term, “conventional wisdom being that the price of a book is already fairly high.” He says that paper prices and shortages are more likely to affect consumers at the cash register.
Those working in the Big Five may be among the most skeptical of the merger. “There's definitely feelings of anxiety and frustration in my DMs at the moment,” spilled the anonymous publishing employee who runs the painfully relatable meme account, Publishers Brunch (named after the popular industry newsletter Publishers Lunch). “A lot of S&S and PRH employees are worried about their jobs if the merger goes through (or if it doesn't).”
Rachel Kambury, an Associate Editor at HarperCollins (formerly Twelve Books), has been distrustful of the merger since she first heard about it. “The potential fallout can’t be understated,” she told me. “Employees will be axed because of ‘redundancy,’ especially those who’ve spent years in the industry, because replacing them will be cheaper for the company overall.” Kambury couldn’t think of an upside to the merger going through for anyone other than those benefiting from it directly, like Jonathan Karp, who confirmed in court that he will receive a bonus per a stipulation in his contract.
It should be noted that employees of the Big Five are not the focus of the DOJ’s case, legally speaking, but they need to be a part of the conversation when considering how this merger would affect authors and consumers, as well as those in the industry. Despite Dohle’s statement under oath that, “Everything is random in publishing. Success is random. Bestsellers are random,” I can tell you from firsthand experience that while there is a certain element of randomness as to what books make it really big, there’s nothing random about the work being done by PRH’s more than 10,000 global employees.
“PRH books are a success because countless people work tireless hours to do everything in their power to make it so,” a marketer at Penguin Random House who asked to remain anonymous told me. “To say ‘publishing is completely random, who knows how or why books are a success’ completely discounts the huge teams of people working to make a book a success.” The shuttering of imprints that results from publishing consolidation would mean fewer of those employees working their hearts out to usher books on the journey from author to consumer.
The $2.2 billion dollar price tag and profit that executives would gain through this merger stands painfully in contrast to the earnings of most publishing employees at a time when tensions in the industry are already high. Just last month, HarperCollins Union became the first member of the Big 5 to go on strike for higher wages, better healthcare, and protections against discrimination. I can’t imagine they’ll be the last.
Before you form your opinion on whether or not this merger should go through, you’ll want to consider that PRH might be S&S’s best choice for finding a buyer. Paramount Global (formerly CBS Viacom) is selling S&S to someone, and the other options aren’t great.
Two alternative buyers that have remained steadily in the mix are HarperCollins and a hypothetical private equity firm. HarperCollins is owned by Rupert Murdoch and looms large in the industry as the second largest publisher––creating similar antitrust concerns––while private equity sends chills down my spine at the mere thought of it. Can we really trust people who list The 7 Habits of Highly Effective People as their favorite book to run a major publishing house? One must consider which is worse: one book publisher having 50% of the market share or watching finance bros with no knowledge of the industry sell off beloved S&S imprints for cash?
“Is there a good option here?” wonders Maher. “Honestly, I'm not sure! At this moment in book business history, I think the advantage all of the Big Five have over their smaller competitors when bidding for books is so significant that I wonder what, if anything, could possibly be done to change it.” He predicts that no matter what happens in the DOJ case, publishing will continue to consolidate, which will lead to “less robust competition at every level of business.”
The trial is expected to run for around three weeks, so, like a great novel, we’ll just have to keep reading to see what happens. To be honest, I’m not sure which ending I’m hoping for.
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