The Department of Justice sued to block the $2.2 billion deal and the publishers, owned by Bertelsmann and Paramount Global, went to court. They failed to convince the judge in the civil antitrust lawsuit, who ruled against the merger.
The U.S. District Court for the District of Columbia found that the effect of the proposed merger would be to substantially lessen competition in the market for U.S. publishing rights to anticipated top-selling books. Stephen King appeared as a star witness for the DOJ, saying “consolidation is bad for competition.” The business has consolidated so much that now it’s about publishers being deferential to rival bidders — a gentlemanly “After you. No, after you,” King quipped
The parties did not appeal. Paramount gets a $200 million breakup fee. CEO Bob Bakish this week called this a “sub-optimal” result. The company still sees Simon & Schuster as noncore asset and will ultimately divest it one way or another, he said.
Dohle has been chief executive since 2013 and was a member of the Bertelsmann executive board. He previously led Random House.
Penguin chief operating officer Nihar Malaviya will step in as interim CEO as the company looks for a replacement for Dohle.
In a statement, Dohle said that, “Following the antitrust decision in the U.S. against the merger of Penguin Random House and Simon & Schuster, I have decided, after nearly 15 years on the Executive Board of Bertelsmann and at the helm of our global publishing business, to hand over the next chapter of Penguin Random House to new leadership.”
Mergers big and small are getting increased scrutiny Stateside. An increasingly activist FTC yesterday said yesterday it will sue to block Microsoft’s proposed $69 billion acquisition of Activision Blizzard.
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