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Penguin Random Houses CEO defends bid to get Simon & Schuster

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The Department of Justice has sued to avoid the $2.18 billion acquisition on antitrust grounds.

Madeline McIntosh, leader of Penguin Random House, at the business’s offices in Manhattan, Feb. 13, 2020. Erik Tanner/The NY Times

By Adam Bednar and Elizabeth A. Harris, NY Times Service

WASHINGTON Madeline McIntosh, CEO of Penguin Random House U.S., took the stand Monday to guard its bid to get rival publishing house Simon & Schuster.

The Department of Justice has sued to avoid the $2.18 billion acquisition on antitrust grounds, and speaking in U.S. District Court for the District of Columbia on Monday, McIntosh disagreed with the governments assertion that the combined publisher would become too dominant in a specific slice of the marketplace.

Books

The slice of the marketplace that the federal government has centered on are books that earn advances of $250,000 or even more, which it called anticipated top-selling books. It says that the five largest publishers in the united kingdom such as Penguin Random House, the largest; and Simon & Schuster, the fourth largest compete mainly against each other to get those titles, and when the amount of publishers were to shrink, so too would your competition.

Penguin Random House argued that the is vast and varied, extending far beyond its biggest players, and that the federal government has centered on a little sliver of deals, where Penguin Random House and Simon & Schuster will be the final bidders for these expensive books. The business also said that the anticipated top-selling books category that the federal government has centered on will not exist as a definite segment of the marketplace.

McIntosh said editor intuition drives the acquisition of books and just how much authors earn upfront.

They are not widgets were producing, McIntosh said. The evaluation is really a highly subjective process.

Jonathan Karp, CEO of Simon & Schuster, testified this month that as the big five have a tendency to compete probably the most on the higher-end, and that their marketing and publicity muscle provide them with an advantage with regards to attracting authors, Simon & Schuster does lose books to smaller firms like W.W. Norton.

Markus Dohle, CEO of Penguin Random House worldwide, testified this month that the books the governments argument is concentrating on aren’t in a particular category: You can find no special editorial, sales or marketing groups that handle projects with advance levels over $250,000, he said. Indeed, the sales team isn’t even told what advance an author is paid.

Dohle also testified that because the companys latest significant merger, which brought Penguin and Random House together in 2013, the publisher has lost market share.

Dohles testimony also revealed information regarding the inner workings of Penguin Random House. Approval from McIntosh is necessary for just about any advance over $1 million, and from Dohle for just about any above $2 million. He said he’s got never rejected this type of request.

Penguin Random House is allowed by its parent company, Bertelsmann, to invest just as much as it wants every year on book acquisitions, Dohle said: We’ve unlimited usage of cash, he said.

He does, however, need Bertelsmanns permission at a particular advance level: $75 million. But Dohle said he’s got never really had to ask Bertelsmann because of this approval. Even Barack and Michelle Obamas joint deal because of their memoirs, that was for a record-demolishing $65 million, fell below the threshold.

This short article originally appeared in THE BRAND NEW York Times.

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