A celebrity appeared as an important witness: Stephen King, 75, appeared before a federal court in Washington in August 2022 and first introduced himself to the judges: “My name is Stephen King. I am a freelance writer.” Then the author of many hugely successful horror novels said, “I think consolidation is bad for competition.” The more companies there are, the better. In doing so, he supported a lawsuit by the US Department of Justice against a billion-euro project by the German media company Bertelsmann in a very public way – with success.
Author Stephen King (wearing a mask) in a Washington court in August.
(Photo: Tom Brenner/Reuters)
The world’s largest book publisher Penguin Random House, which belongs entirely to Bertelsmann, announced two years ago that it wanted to take over its competitor Simon & Schuster for more than two billion dollars. The approval of the cartel authorities was initially considered almost a formality. But now the billion-dollar business is failing precisely because of this. A US district court in Washington, following a lawsuit filed by the Justice Department, ruled that the merger would significantly restrict competition in the market for the publishing rights to the best-selling books in the US.
Contrary to what was originally planned, Bertelsmann does not want to appeal. The group announced late Monday evening that after discussions with the Simon & Schuster shareholder Paramount Global, the plan to challenge the US court’s judgment was no longer being pursued. Paramount confirmed in a stock release that the deal is off the table. “The book business has been an identity for Bertelsmann for 187 years. Nothing will change about that in the future,” said Bertelsmann CEO Thomas Rabe.
It would have been an important and prestigious acquisition for Bertelsmann. Not only Stephen King, but also Hillary Clinton, John Irving and Bob Woodward publish their books with Simon & Schuster. The authors of the publishing house are known worldwide, some are even cult – and they ensure pretty good business. The publishing house was founded in 1924 by Richard Simon and Lincoln Schuster and is one of the largest and most well-known book publishers in the USA. Penguin Random House, headquartered in New York, already has around 300 independent book publishers on six continents with more than 16,000 new publications and more than 700 million books sold each year. The publisher recently published, among other things, the memoirs of ex-President Barack Obama and thus made a million circulation. Michelle Obama is also one of the authors, and Prince Harry’s autobiography will be published in January. There is also a long list of well-known authors.
In France, too, Bertelsmann failed because of the antitrust authorities
“A merger would be in the interests of competition,” boss Rabe said at the beginning of November and hoped for an appointment – in vain. For him and Markus Dohle, the head of Penguin Random House, the failure is quite a setback, there were high hopes beforehand. Bertelsmann’s figures are good, but the list of problems is long. In France, too, a flagship project failed due to the stiff resistance of the competition authorities: Rabe wanted to sell the television channel M 6 to its competitor TF 1 so that a “national champion” would emerge. Now he has to continue alone with M 6 for the time being. The merger of the Luxembourg call center operator Majorel, in which Bertelsmann has a stake, with a competitor also failed.
In Germany, the merger of RTL with the Hamburg publishing house Gruner + Jahr is causing a lot of unrest, and top managers are leaving the company. A success report from the USA would have been welcome. The book business is also the nucleus from which Bertelsmann once arose.
Simon & Schuster is currently still part of Paramount. The failure of the deal with Bertelsmann now opens the door for a new buyer. Harper-Collins, owned by Rupert Murdoch’s News Corp, and Lagardère’s Hachette Book Group have already publicly expressed interest in acquiring Simon & Schuster. Harper-Collins had unsuccessfully tried to get the publisher in 2020, at that time Bertelsmann was preferred.