From The Wall Street Journal:
A federal judge on Monday blocked Penguin Random House from acquiring rival book publisher Simon & Schuster for about $2.18 billion, agreeing with the Justice Department that the planned merger would unlawfully lessen competition.
U.S. District Judge Florence Pan accepted the Justice Department’s arguments that some writers would likely be harmed if Penguin Random House, the world’s largest consumer-book publisher, was allowed to acquire another of the five largest book publishers in the U.S.
“The Court finds that the United States has shown that the effect of the proposed merger may be substantially to lessen competition in the market for the U.S. publishing rights to anticipated top-selling books,” Judge Pan wrote in a two-page order.
The ruling, which follows an August trial in Washington, D.C., provided a long-awaited court victory for Biden-era antitrust enforcers who had lost a series of recent cases after pledging to take a more aggressive approach against corporate deal making, especially in industries that have become more consolidated.
The losses, including in the healthcare and agriculture industries, had served as a reminder that much of the administration’s antitrust agenda is dependent on persuading the federal judiciary. Justice Department officials were looking to the publishing case as a chance to build fresh, favorable court precedent.
. . . .
Assistant Attorney General Jonathan Kanter, the Justice Department’s top antitrust official, said the publishing merger would have decreased author compensation and “diminished the breadth, depth and diversity of our stories and ideas.”
Link to the rest at The Wall Street Journal
Seems we won’t be seeing Stephen King’s Tweets on this one.
I don’t particulary care who (if anybody) ends up getting the zombie business but the number of lost jobs from S&S closing down will impact a lot more people than the few elite authors and insider associates the court favored. At a time inflation, paper economics, and supple chain restructuring are sucking the profitability of corporate retail book publishing. And the renamed PARAMOUNT remains in play, now with $25B less to stay afloat.
What does concern me is that they are (again) gaming “relevant market definition” to pre-determine trial outcome.
Felix, everyone has been gaming “relevant market definition” since the Sherman Act was passed well over a century ago. It’s one of the weaknesses of antitrust theory and doctrine; the problem is that nobody has come up with a judicially-administrable alternative that’s clearly and in general better.
The real problem, which is masked by the market-definition problem, is the distinction (both in theory and in practice) between per se antitrust violations and the Rule of [Un]Reason. The former, in the name of protecting against certain obviously “bad” practices, can be twisted against “innovation” precisely because those who wrote the various statutes, and most economists since, have foundered on an error of mid-nineteenth-century economics.† The latter essentially means “Whose lawyers are better funded and more amenable to borderline-and-worse conduct?” in practice. Specific examples include US v. IBM and US v. Microsoft, neither of which actually grappled with the real anticompetitive conduct.
† Marx was right that private, concentrated control of an essential part of the economy is dangerous; he was wrong in his target (control of the means of distribution is far more dangerous than of the means of production, but nineteenth-century data was insufficient to consider that problem). And that’s before getting to questions of what is “too concentrated” — let alone the appropriate remedy.
In tbis case they are blatantly ignoring facts, context, and consequences in order to make a
political ideological statement. The fact is S&S is not a viable ongoing concern. Not today.
Paramount itself is barely viable in the short term, and not so in the long term. They *will* have to sell themselves and divesting themselves of S&S was about getting rid of it while it had value to somebody. Buying time, hoping for a chance to survive, unlikely though that might be when bigger players with bigger reach and deeper pockets are recalibrating in the face of the denied recesion. (At least until after the election.)
https://www.msn.com/en-us/money/companies/paramount-has-two-hit-streaming-services-now-it-wants-some-credit/ar-AA13C5iU?ocid=EMMX&cvid=9b02f03321154782be19758951896393
Blocking the sale destroys *two* companies. Paramount without the extra $25B won’t last another year. And what will the apparatchiks do when they have to sell to Apple or Disney? Try to block that one, too?
They were *lucky* to get a bidding war between HC and the penguin. Without penguin and in today’s world they’ll be lucky to get a fraction of the last bid. If that. They might just close up shop and auction off the back catalog. And the bulk of the staff will be excessed either way. If anything, Penguin is likely to consider themselves lucky. They’ll need the $25B soon enough. Winter is coming and not just for tech.
The Absolutists may feel good but nobody else.
Felix:
I disagree with your sources for a fundamental reason: They’re based on trusting the accounting at major entertainment-industry firms.
Say that last clause again. Out loud. Without laughing. It’s not easy, is it?
I have specific reasons to distrust virtually any aspect of the publicly-stated accounting at one of the five firms (in the Redstone empire) at issue here; I have substantial-but-subject-to-some-revision reasons to distrust the accounting at three of the others; and given that the same auditors are responsible for the fifth firm, I have no reason to trust that accounting in the face of the problems at the other four. At least it’s not Carolco, though… at least, not as far as I know… yet…
Two points:
1- My primary rule when looking at the deeds of idiotpoliticians™ and their apparatchicks is “Who benefit$$$”?
Never mind the arbitrary application of a fuzzy regulation:
Who benefits from letting the sale go through?
Who benefits from blocking it?
Which options produce a tolerable outcome for more people?
If letting the Penguin grow fatter is bad, why wasn’t it bad when they scarfed up Random House which was profitable and healthy on its own? 50% market share is fine but 55% isn’t? Really?
It was the same gang in power, after all.
2- If Paramount is so healthy why don’t they expand to all the corners of the US, Europe, and SouthAm, three years after launch, like all the major streaming services? Netflix, PRIME, Hulu, Disney, and HBOMAX either launched globally or got there within the first year. The whole point of streaming is that the internet is global and supporting it *requires* a global subscriber base. Without it they’re just Wannabes. (Like CRACKLE and DISCOVER+). And streaming isn’t a business for wannabes. Discovery, ahem, discovered that within months and sold themselves to WB within months.
Never mind what the bean counters claim; look at their deeds. Selling off pieces of the company, selling their tangible assets, and leaving big money markets untapped to save a few millions while Cable and OTA are both slowly fading away, those aren’t the acts of a healthy, growing company.
And winter is coming to legacy media: the ad money is going to shrink and not just for a quarter or two. Which is why all their brags about subscriber numbers aren’t raising their stock; they are meaningless without the matching number of *churn* % and investors know better than bet on number of accounts. And if they were healthy they wouldn’t be fretting over the stock price. The others aren’t because they know they will outlive the stagflation.
Paramount won’t, particularly if they can’t get rid of S&S.
As I said, they needed the money.
I give them two years, max.
(They probably needed to grease a few more palms.)
To be blunt, and critical, and link this up with publishing:
Any purported need to sell parts off Paramount is due to management’s/ownership’s allegiance to the combination of “the way things have always been done” and “the supply of well-financed bigger fools is at risk, so we’re better off getting out now.” To which I say “Twitter.”
So we’ll have to agree to disagree. Which is fine; neither of us is going to be leading a competing bid (unless “Felix Torres” is a pseudonym for “Jeff Bezos” <vbeg>).
An inside-baseball-type note:
Judge Pan was just confirmed and elevate to the Court of Appeals that will hear any appeal. Those with moderately long memories may recall that the same thing happened in the Google Books case (Judge Chin was elevated to the Second Circuit during the course of the matter, but retained jurisdiction to completion).
The point being that an appeal will be even tougher when the judges who hear the appeal have chambers right down the hall from their colleague who issued the opinion, instead of in a different part of the building. Especially if, by the time the matter comes up for argument, they’ve gotten comfortable with Judge Pan from sitting on appellate panels (of three judges) with her…
Nothing is ever a guarantee, but this makes things more interesting.