Who should own whom

In the 1980s and 1990s The Bookseller produced a regular article called “Who Owns Whom”, which charted the ongoing agglomeration of British publishing. In 1990, “such was the pace of change” the then-editor Louis Baum turned the idea into a separate supplement. The 1998 edition began with a family tree, whereupon companies such as Cassell (founded in 1840), Macmillan (1843), Collins (1817) and Longman (1724) begin their lives at the leafy end, only to be slowly rolled-up into bigger and bigger trunks—Bertelsmann, Holtzbrinck, News Corp and the like. The Bookseller’s view was not that this trend was wrong, but that these mega-mergers tended to fail. Trade publishing, or so we surmised back then, did not generate enough cash to keep shareholders happy in the long-term.

I mention this to provide context to the Department of Justice’s effort in the US to block the proposed merger between Penguin Random House (PRH) and Simon & Schuster (S&S). The DoJ’s charge is that by reducing the number of big publishers from five to four, PRH would be able to “exert outsized influence over which books are published in the US and how much authors are paid for their work”. Its thesis is that the market for author advances could deflate once PRH steps up again.

It has been obvious for some time that PRH global c.e.o. Markus Dohle was prepping for a fight—he has put it about that PRH has been losing market share, that the real decisions are made at imprint level, and that PRH has supported a culture of internal competition that will continue. The DoJ points to internal memos that offer a different view, contending that assurances over imprint autonomy are unenforceable and, post-merger, PRH/S&S could change tack entirely, squeezing authors as a monopsony (whereby a single buyer controls the market for, in this case, rights). 

Some will regard this as public posturing on behalf of US President Biden and his administration, which needs to show it can take on big business. PRH’s lawyer called the suit “wrong on the facts, the law and public policy”. Internally, PRH is leaning into the battle, arguing that it has a good track-record both as an acquirer and steward.

There is also the view, put out by the US Authors Guild, that the DoJ is once again going after the symptom while ignoring the fact that it is Amazon that has the outsized influence on this market. The guild also expressed concern that S&S authors would not now benefit from PRH’s “author services and excellent distribution”, and queried what would happen to them should the sale fall through.

The guild’s pragmatism is instructive. It is true some acquisitions did fail, but many publishers have since put down strong roots within the corporates that has enabled editors to be competitive but not reckless, and these groups to bulk up just enough to act as a bulwark to the future Amazon once presented (anyone remember the “Spotify for books”?). This view may be too paternalistic for some. But it is also accurate, and if the DoJ wishes to block this arrangement it will need to learn how to see the wood from the trees.