Publisher to let sale to Penguin Random fall apart

NEW YORK: Book-publishing powerhouse Simon and Schuster’s owner is expected to let its Us$2.2bil (Rm10.08bil) sale to Penguin Random House collapse, opening the door for a new suitor to try to clinch a deal, according to people familiar with the matter.

The acquisition was blocked on Nov 1 by a federal judge on antitrust grounds. The German media group Bertelsmann SE and Co, which owns Penguin, was unable to convince Paramount Global, Simon and Schuster’s current owner, to help launch an appeal and extend the deal contract before it was due to expire yesterday, the sources said.

Bertelsmann will owe Paramount a Us$200mil (Rm917mil) break-up fee as a result of the transaction falling apart.

The sources requested anonymity ahead of official announcements this week. Paramount declined to comment, while a Bertelsmann spokesperson did not respond to a request for comment.

The United States Justice Department sued to stop the tie-up of the two publishers, which combined would have accounted for more than 25% of all print books sold in the US this year.

In its complaint, it argued the deal would lead to lower earnings for authors because of the reduced competition. Best-selling author Stephen King testified in favour of the government’s arguments during the trial.

Penguin writers include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele, while Simon and Schuster publishes King, Jennifer Weiner and Hillary Rodham Clinton, among others.

The top five US publishers are Penguin, Harpercollins, Macmillan, Simon and Schuster, and Hachette.

Following the collapse of the deal, Paramount will be free to explore the sale of Simon and Schuster anew. Previously known as Viacomcbs, Paramount had inked the Penguin deal so it could focus on its video and streaming businesses.

Harpercollins, which is controlled by News Corp, and Lagardere SCA’S Hachette Book Group have previously expressed interest publicly in buying Simon and Schuster.

Harpercollins also unsuccessfully bid for Simon and Schuster when it was put up for sale by Paramount in early 2020.

Harpercollins and Hachette did not respond to requests for comment.

— Reuters Favourable testimony: Stephen King signs autographs as he leaves the US District Court in Washington. The celebrated novelist is siding with the government in an antitrust case against a publisher merger.