Writers will have to pay the price for a deal between major US publishers

“Penguin and Simon & Schuster face off today”, Justice Department attorney John Reid closed arguments at the agency’s federal trial in Washington to block the deal. “The merger will put an end to this competition”and added that “We talked about it because the best protection for writers is fierce competition.”

But Daniel Petroselli, a lawyer for Penguin Random House and its parent company Bertelsmann ES, said the government was misreading the market and ignoring the value of smaller publishers such as WW Norton & Company Inc. and The Walt Disney Company.

“The only reason we are here is because the government has created an artificial market with artificial concentration and artificial damage”says Petroselli.

The top five book publishers: Penguin, Simon & Schuster, HarperCollins Publishers LLC, Hachette Book Group Inc. and Macmillan Publishers Inc., often referred to as the Big Five, are responsible for 90% of the best-selling books and in which authors are remunerated. for their work, Read said of the Justice Department.

The combination of Penguin and Simon & Schuster would control about 49% of that market and potentially reduce author payments by 4% to 11%, he said. Justice Department economic experts testified that writers’ advances would be reduced by an average of $100,000.

Reid said the high market share makes the deal illegal under U.S. antitrust law unless the defense shows new entrants are likely to enter the market or the cost savings from the deal. agreement outweigh any potential losses.

In the past 30 years, no publisher has hit the market and been as strong as the Big Five, which include Amazon.com Inc., which now publishes and sells its books, he said. .

While Penguin promised that Simon & Schuster would still be able to bid against the Penguin divisions after the printing merger, Reid said the promise was not enforceable and could be revoked at any time.

But Penguin’s Petroselli said most books — about 60% — are sold to publishers through bilateral negotiations with an author’s agent, not the auctions the Justice Department has focused on. When auctions are held, agents determine which publishers are invited to participate, he said.

Simon & Schuster and ViacomCBS attorney Stephen Fishbein, recently renamed Paramount Global, said three of the other Big Five publishers were “ready to seize” Any vacancy created by a combination of Penguin and Simon & Schuster. Amazon, Disney and Scholastic Corp. As smaller publishers prepared to compete.

“They have the resources, they have the experience”said Fishbein.

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