Simon & Schuster owner is set to let its $2.2bn (£1.9bn) sale to Penguin Random House collapse today after the deal was blocked by US regulators.
Sources told Reuters that German media group Bertelsmann, which owns Penguin, has been unable to convince Paramount Global, Simon & Schuster’s owner, to launch an appeal of the decision.
A federal judge said last month that the combination of the companies would “substantially” lessen competition.
The largest five publishers currently control 90 per cent of the market, with a merged firm making up around 49 per cent of the blockbuster book space.
The crux of the case was focused on authors’ earnings as opposed to consumer choice, and the argument from the US government was that advances for writers across the board would be lower if the publishing giants came together, as there would be less competition to grab the best books that would drive up prices.
The justice department said the merger would “exert outsized influence over which books are published in the United States and how much authors are paid for their work”.
Penguin released the following statement this evening: “Penguin Random House remains convinced that it is the best home for Simon & Schuster’s employees and authors, and together with Bertelsmann, we did everything possible to complete the acquisition.
We believe the judge’s ruling is wrong and planned to appeal the decision, confident we could make a compelling and persuasive argument to reverse the lower court ruling on appeal. However, we have to accept Paramount’s decision not to move forward. We want to thank our Penguin Random House employees and the teams at Simon & Schuster for their support.
We wish them the very best in the future, and look forward to continuing to make a positive impact on society through the books we are honored to publish for readers everywhere'”