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Federal judge blocks Penguin Random House from buying Simon & Schuster

MARY LOUISE KELLY, HOST:

A deal between two of the nation's biggest book publishers will not go through. Yesterday a federal judge blocked Penguin Random House from buying its rivals, Simon & Schuster, arguing the merger could substantially hurt competition. Well, Alexandra Alter covered the trial for The New York Times. And before we jump in, I should mention that I have published two books with Simon & Schuster, but I am now with a different publisher. Alexandra Alter, welcome to ALL THINGS CONSIDERED.

ALEXANDRA ALTER: Thanks so much for having me.

KELLY: How surprising is this ruling?

ALTER: The ruling was extremely surprising for anyone who maybe hadn't been paying attention to the trial. There has been a ton of consolidation in publishing happening for decades. It's completely transformed the industry. And nothing has been challenged for a long time by the government. So there hasn't been a lot of scrutiny. But during the three-week trial in August, it was pretty apparent to people who were following it closely that the judge, Florence Pan, was pretty sympathetic to the Justice Department's arguments that this deal would be terrible for competition and the industry and could ultimately harm authors. And she had a lot of kind of detailed questions and pointed ones for Penguin Random House, as they tried to defend this deal as something that would be great for authors and would actually help them.

KELLY: OK. Let me focus on what the Justice Department case was because, as you note, they were all about the harm that this merger, in their view, would do to authors. And they brought in big guns. They had Stephen King there testifying as a witness for the government. Just briefly lay out what the Justice Department's case was.

ALTER: So their case was pretty unusual because, you know, antitrust for decades has really been focused on harm to consumers. That's sort of where the government tries to step in to make sure that prices don't go up for consumers when companies get too big. But the Justice Department here made no allegation of harm to consumers. They were looking at authors and author earnings. So in a way, the authors are the suppliers of the books to the publishers, and the publishers are buying them. And their contention was if there are fewer publishers competing for these books, they don't have to pay as much. When you look at authors' earnings being reduced, that could result in fewer books being written and fewer books being published and fewer kind of ideas circulating. So it was interesting.

KELLY: It's also interesting that in a case with such high stakes for publishing and for readers that readers were not really, it sounds like, much of a focal point at all. It was all about the business.

ALTER: Exactly. They didn't make any claim that, you know, if the number of big publishers goes down, the price of books will go up. That wasn't part of the case.

KELLY: How are Penguin Random House and Simon & Schuster responding?

ALTER: They immediately said they disagreed strongly with the opinion and that they plan to request an expedited appeal.

KELLY: OK. So more twists and turns to come, it sounds like. Big picture, you write that this case marks a victory for the Biden administration and its more aggressive approach to antitrust enforcement. So what are you watching for next?

ALTER: So a lot of people in the publishing world say that this could open up the possibility of or a path for the government to perhaps bring some kind of antitrust claim against Amazon, which has an incredible amount of control over books on the retail side. And so they say the same argument that was laid out in this case could be then applied to Amazon. And I think that's what you're going to see a lot of people and organizations in the publishing world advocating for next.

KELLY: Alexandra Alter writes about publishing and the literary world for The New York Times. Thank you.

ALTER: Thank you so much for having me. Transcript provided by NPR, Copyright NPR.

Lauren Hodges is an associate producer for All Things Considered. She joined the show in 2018 after seven years in the NPR newsroom as a producer and editor. She doesn't mind that you used her pens, she just likes them a certain way and asks that you put them back the way you found them, thanks. Despite years working on interviews with notable politicians, public figures, and celebrities for NPR, Hodges completely lost her cool when she heard RuPaul's voice and was told to sit quietly in a corner during the rest of the interview. She promises to do better next time.
Christopher Intagliata is an editor at All Things Considered, where he writes news and edits interviews with politicians, musicians, restaurant owners, scientists and many of the other voices heard on the air.
Mary Louise Kelly is a co-host of All Things Considered, NPR's award-winning afternoon newsmagazine.