Axios Pro: Media Deals
August 01, 2022
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Welcome to August, Media Deals readers!

🍿 Situational awareness: "Everything Everywhere All at Once" surpassed $100 million in global ticket sales, A24's first movie to hit that box office milestone.

1 big thing: Book publishers' antitrust trial begins

Illustration of books like dominoes being hit by a gavel.
Illustration: Aïda Amer/Axios

Penguin Random House's proposed acquisition of rival publishing house Simon & Schuster for $2.2 billion goes to trial today, Kerry writes.

Why it matters: The result of the trial will not only dramatically affect the publishing industry, but it also will set a precedent for M&A at large as the Biden administration continues to challenge corporate consolidation.

  • If Penguin Random House's parent company, Bertelsmann, loses, it presents an opportunity for another company to buy Simon & Schuster from Paramount Global.

State of play: Penguin Random House is the biggest U.S. book publisher, while Simon & Schuster is the fourth largest. They make up the Big Five, along with Hachette, Macmillan and HarperCollins.

  • The Department of Justice, which filed the lawsuit last November, alleges the acquisition would violate antitrust law. The DOJ said Penguin Random House would gain "outsized influence" over which books are published in the U.S. and how much authors are paid.
  • The publishers argue the deal would benefit authors and readers. They say the acquisition would increase efficiencies and allow them to pay authors more, pushing other publishing houses to increase their bids and lower book prices for readers.

What they're saying: "The more the big publishers consolidate, the harder it is for indie publishers to survive," Stephen King, one of the government's witnesses, told The New York Times. "And that is where the good writers are currently starting out and learning their chops."

  • "Simon & Schuster (which, full disclosure, was the publisher of my most recent book) is going to be sold by Paramount Global one way or another. Speculation abounds about potential private equity bidders," Kerry's former colleague Brian Stelter writes.

What's next: The trial is slated to run Aug. 1-19, and Judge Florence Pan at the U.S. District Court in Washington is expected to issue a ruling in November, per Vanity Fair.

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