Stephen King plans to fight for the US government in a case against a mega publishing merger

WASHINGTON, Aug 1 (Reuters) – The U.S. Justice Department asked a federal judge on Monday to block the $2.2 billion merger of two of the “Big Five” book publishers, Penguin Random House and Simon & Schuster, in a trial expected to testimony from horror writer Stephen King.

“This is real money for real people,” said Justice Department attorney John Read.

Also on Monday, in the same federal courthouse in Washington, the Justice Department argued before another judge that UnitedHealth Group’s ( UNH.N ) $8 billion deal to buy Change Healthcare ( CHNG.O ) should be halted. Read more

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In publishers’ merger efforts, the government’s focus is not on what consumers pay for books, but on advance payments to the most successful authors, especially those who earn $250,000 or more.

“The evidence will show that the proposed merger would likely result in authors of prospective best-sellers receiving less progress, meaning authors who work for years on their manuscripts will be paid less for their efforts,” the government said in a hearing.

The government also plans to show that there was concern among the merging parties that the deal was not legal. It previously published an email sent by Simon & Schuster CEO Jonathan Karp, who wrote: “I’m pretty sure the Justice Department wouldn’t let Penguin Random House buy us, but that’s assuming we still have a Justice Department.”

King, author of “The Shining,” “Carrie” and other blockbusters, will testify for the government, along with publishing executives and authors’ agents.

Hachette Book Group CEO Michael Pietsch will testify Monday, while King is expected to testify Tuesday.

Penguin Random House, the largest U.S. book publisher, said it plans to buy rival Simon & Schuster in November 2020. Penguin Random House is owned by German media conglomerate Bertelsmann ( BTGGg.F ). Simon & Schuster is owned by ViacomCBS, now Paramount Global ( PARA.O ). The Ministry of Justice filed its case in November 2021. read more

The defense, led by attorney Daniel Petrocelli, who defeated the Trump administration’s 2018 bid to block AT&T Inc’s ( TN ) acquisition of Time Warner, argued that the market for books, and for publishers to win best-selling authors, is competitive and that the merger. will do it even more.

The government is asking the court to block the merger “for less than 100 books a year,” Petrocelli said in opening arguments, rejecting the idea that the biggest booksellers can reduce donations.

The publishers will argue that the evidence shows that in bids for potential bestsellers Penguin Random House and Simon & Schuster “rarely have the top two bidders”.

The top five publishers are Penguin Random House, HarperCollins, Macmillan, Simon & Schuster and Hachette, while Walt Disney Co ( DIS.N ) and Amazon.com Inc ( AMZN.O ) are also in the market. HarperCollins is owned by News Corp (NWSA.O).

Judge Florence Pan of the U.S. District Court for the District of Columbia will decide whether the deal can go forward. The trial is expected to last two to three weeks.

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Reporting by Diane Bartz and David Shepardson in Washington; Editing by Matthew Lewis and Mark Porter

Our standards: Thomson Reuters Trust Principles.

Diane Bartz

Thomson Reuters

Focused on US antitrust issues as well as corporate regulation and legislation, with experience covering the war in Bosnia, elections in Mexico and Nicaragua, as well as stories from Brazil, Chile, Cuba, El Salvador, Nigeria and Peru.

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