PRH exec Sansigre's testimony excluded by judge in S&S merger trial

The judge overseeing the anti-trust trial of Penguin Random House’s merger with Simon & Schuster has excluded the testimony of PRH’s senior vice-president and global head of mergers and acquisitions, as figures presented in his case had not been examined independently.

Judge Florence Pan made the decision to throw out Manuel Sansigre’s evidence, on the grounds his revenue projections were not independently verified, and were based on models from previous mergers, Publishers Weekly reported. She also said the model, which has been updated more than 100 times since being drawn up in November 2020, was unreliable because of the frequent amendments.

Pan noted the firm expected to save $81m in 2025 from cost savings, mainly redundancies, including $25m from IT, administration and management, $25m in savings from distribution and warehousing and $3m from not using third-party contractors. PRH has clarified that no employee working on the creative team is at risk of losing their jobs.

Sansigre initially said he had identified around 70 people with overlapping roles at PRH and S&S, particularly in “high-end” editorial and art production. However, The Bookseller understands these were mainly high-paid executives and the number of potential redundancies is five, none in editorial.

Laying out his plans for how the merger would take place, Sansigre said sales and distrbution would be streamlined and integrated. PRH would only use one of S&S’ warehouses, located in New Jersey, as the company has invested significantly in logistics, and would be able to absorb S&S’ distribution business. The sales team is roughly five times the size of S&S, and Sansigre said the company "doesn’t need more".

Sansigre has mooted the potential in scrapping S&S’ current method of processing returns externally – something that could be brought in house if the merger took place, and reducing S&S’ return rate, spending on paper, printing and shipping.

He also pointed to higher pre-sales at PRH and better database management as advantages to authors from the deal. As an example of the deal’s benefits, he said PRH “doubled” the sales of Little Tiger when it was acquired in 2019. 

In further testimony challenging the government’s central claim the merger will result in lower advances for authors, Edward Snyder, Professor at the Yale School of Management, presented data from a survey of 18 literary agents, who offered him information about 975 different book deals. He said that of the 975 deals, 360 at $250,000 or more, 150 were won by single bidders, and 150 went to auction, with the remaining 60 uncategorised. PRH and S&S won just over a quarter of those, securing 96 of the 360 contracts.

“Publishers bid a lot and they lose a lot," he said, referencing smaller publishers Chronicle and Norton, which he said were bidding on big books and were a “viable option" in competition for books. 

The trial continues.