PREVIOUSLY: Attorneys for the Justice Department and Penguin Random House squared off on Monday in the first day of an antitrust trial, as the government challenges the publishing giant’s proposed $2.2 billion acquisition of Simon & Schuster. The government called its first witness late in the morning: Michael Pietsch, CEO of Hachette Book Group. He also challenged the government’s argument that the big five publishers should be treated as a unit and that the smaller publishers were merely a “farm team.” “I think the government is swinging for tthe fences” in making that case, he said. Stephen Fishbein, representing ViacomCBS (now Paramount Global), parent company of Simon & Schuster “will be sold to somebody” and that it was “likely to be another book publisher because other publishers can get highest efficiencies.” He noted that when Simon & Schuster was put up for sale, HarperCollins and Hachette sought to acquire Simon & Schuster, but now are planning to testify in opposition to the transaction. He said that if the publisher were to “just pull the plug on that,” it would “destroy all the trust and credibility” that the company has with authors and their agents. He defended the promise that Penguin Random House imprints would still compete internally against each other for titles. “There is a saying that you know that the agents have the power because the publishers always pay for lunch,” he said.
Should a combined Penguin Random House and Simon & Schuster be “foolish enough” to drive down their advances, other publishers will “jump in” to grab the most prized titles, he said. He also challenged that publishers are in the driver’s seat when it comes to competition for the most prized titles. “You cannot define an antitrust market on the idea that you think a book is going to be a top seller,” he said. He said that non-big five publishers come in second in 23% of the auctions. Petrocelli also said that they will show that the publishers who pay advances of $250,000 or more is not confined to the big five publishers, but that more than 30 publishers of varying sizes compete. Representing AT&T and Time Warner in the defense of their 2018 merger, Petrocelli deployed a similar tactic to try to undermine the government’s case. He also indicated that in presenting the publishers’ case, they would pick apart the methodology used by the government’s key witness to assess the transaction’s competitive harm. “Every book starts out as an anticipated best seller in the gleam or an authors or an editors eye,” he said. He said that the DOJ’s focus on the market for anticipated best sellers is not grounded in how the business works. “The government has created an artificial market to create artificial concentration to create artificial harm,” Petrocelli said. Mike Pence Subpoenaed By Special Prosecutor Overseeing Donald Trump Investigations
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