The Possible Effects of the Penguin Random House and Simon & Schuster Merger: NPR

The Penguin logo is seen on the spine of a book. The US Department of Justice is suing Penguin Random House and Simon & Schuster to stop the companies from completing a merger valued at $2.175 billion.

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The Penguin logo is seen on the spine of a book. The US Department of Justice is suing Penguin Random House and Simon & Schuster to stop the companies from completing a merger valued at $2.175 billion.

Tim Ireland/PA Images via Getty Images

One of the biggest antitrust lawsuits to ever hit the publishing industry is unfolding in a federal courthouse in Washington. The Department of Justice says the proposed merger announced in 2020 between Penguin Random House and Simon & Schuster would stifle competition.

But what would a successful merger mean in practical terms for booksellers, authors and other industry players?

Penguin Random House author Saira Rao.

Alli Bibbo/Helm Literary Agency


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Alli Bibbo/Helm Literary Agency

Saira Rao, an author from Richmond, Virginia, has followed the case closely. Even though Penguin Random House is its publisher, it said it welcomes the government’s backlash against the giant’s attempt to expand even further. Rao said it sends a message about the need for more diversity in the publishing industry, which has traditionally excluded writers of color like her, and made her books harder to sell.

“I have a white agent. The publishers of our books are white. The marketing people are white,” said Rao, who is South Asian American. “It’s white, white, white, white, white.”

A study, published in 2020 by leading children’s book publisher Lee & Low Books in conjunction with Boston University, indicates that 76% of people in the industry identify as white (up from 79% the last time the company conducted its survey in 2015).

Authors Guild President Douglas Preston said reduced competition would likely make the sector even less diverse, which is bad not only for authors but also for readers.

“Readers are served by maximum diversity of authors and voices, especially authors from neglected communities,” Preston said. “These are writers who don’t make a lot of money, but have very important things to say.”

A spokesperson for Penguin Random House said in a statement that it was “committed to fostering diversity and providing BIPOC opportunities across the literary world, from publishers to authors.” And that after the merger, it would continue.

Simon & Schuster said something similar in an emailed statement from a spokesperson: “Simon & Schuster is committed to working with our employees, authors and the publishing community to make our business and of our industry a safe and inclusive environment for all.” He said the company, whether merged or not, would continue “to work to be a publisher whose books and staff represent the breadth and depth of our diverse population.”

Authors Guild president Preston, who said some of his own books have been published by Simon & Schuster, added that authors’ advances would also be likely to be affected by further consolidation.

“The fewer publishers bidding against each other for an author’s work, the lower the lead,” Preston said. “It’s Economics 101.”

But Penguin Random House argues that the merger would increase authors’ advances. The pre-trial brief, shared with NPR, said: “This is a pro-consumer acquisition that will allow Simon & Schuster and its publishers and authors to become part of PRH with its supply chain at the leading edge of the industry, giving readers and booksellers around the world greater access to their books. It will also enhance competition by enabling the combined company to offer increased advancements and marketing support to authors. Competition will increase – not diminish – as a result of these investments.

A spokesperson for Penguin Random House said the company could not share data on author progress since the last major publishing industry merger between Random House and Penguin in 2013, due to legal constraints.

A Simon & Schuster spokesperson said the company could not discuss the authors’ advances because they were at issue in the lawsuit.

Some industry insiders agree with publishers that the potential union of two of the country’s top five publishing houses poses no threat to a robust industry that publishes a million titles a year.

“I see nothing but a failure in terms of the book publishing industry’s ability to meet readers’ needs,” said Brian O’Leary, executive director of the Book Industry Study Group, which provides supply chain research for approximately two hundred members of the publishing industry, including Penguin Random House and Simon & Schuster.

O’Leary said even if the judge rules in favor of the merger, book lovers would still benefit from the hundreds of thousands of titles published each year by thousands of independent publishers.

“There are plenty of outlets for writers and not just in the US market, but around the world,” O’Leary said.

But like other critics of the acquisition, Josiah Luis Alderete, co-owner of Medicine for Nightmares, an independent bookstore in San Francisco that stocks books from independent presses and Big Five publishing houses, said the consolidation would reduce all kinds of diversity and would provide fewer opportunities for writers.

Josiah Luis Alderete, co-owner of Medicine for Nightmares, a San Francisco, Calif. bookstore focused on communities of color.

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Josiah Luis Alderete, co-owner of Medicine for Nightmares, a San Francisco, Calif. bookstore focused on communities of color.

Chloe Veltman/NPR

“It worries me,” Alderete said. “It will be a lot fewer people deciding what it is.”

But he said he wouldn’t be surprised if the merger went ahead anyway.

“This is America,” Alderete said. “Money talks.”

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