CEO of publishing giant defends merger

WASHINGTON — The head of publishing titan Penguin Random House on Thursday defended his company’s deal to acquire rival Simon & Schuster against the government’s claim it would thwart competition.

Under questioning at a federal antitrust trial, CEO Markus Dohle also admitted that while he has promised to allow the two merged companies to continue to bid against each other for deals with authors, Penguin Random House’s German parent firm Bertelsmann has no legal obligation to honour that commitment.

Commenting on what has been a core government argument, Dohle allowed that smaller advance payments to authors can lead to fewer books being published. Advances, which reach into the millions for such top-selling authors as Stephen King and James Patterson, are guaranteed payments to writers that can affect a book’s profitability. Books that sell well are more likely to have received bigger advances, Dohle acknowledged.

The U.S. Justice Department has sued to block the proposed $2.2 billion merger of Penguin Random House with Simon & Schuster, the fourth-largest U.S. publisher, which would reduce the so-called “Big Five” U.S. publishers to four. The other three are HarperCollins Publishers, Hachette Book Group and Macmillan.

The government contends that allowing Bertelsmann to buy Simon & Schuster from U.S. media and entertainment company Paramount Global would thwart competition and give Penguin Random House outsize influence over what books are published in the U.S. and how much authors are paid, giving consumers fewer books to choose from.

The new company, if approved, would be by far the biggest book publishing entity in U.S. history.