Merger plans complicate Justice lawsuit
By Alan Wallace
Published: Saturday, Nov. 3, 2012, 9:03 p.m.
A joint venture merging two of book publishing's biggest names could not only reshape the industry — it could affect the U.S. Justice Department's lawsuit about alleged fixing of e-book prices.
The deal, announced last Monday and subject to regulatory approvals, would combine Pearson's Penguin and Bertelsmann's Random House. Bertelsmann would own 53 percent of the new Penguin Random House; Pearson, 47 percent.
A joint statement from the parent companies, which expect to close the deal by the second half of 2013, and numerous media reports indicate publishing's digital revolution is a major motivating factor.
Both publishing houses remain profitable. Operating profits last year were $259 million for Random House, $179 million for Penguin, according to CNN Money.
But both obviously feel change is needed to remain profitable and viable. Though the joint statement didn't mention Amazon, the TechCrunch website calls the e-commerce giant “the elephant in the room” with Random House and Penguin because of how its online sales of print books, e-books and e-reading Kindle devices, along with its own publishing ventures, have disrupted the books business.
In response to Amazon grabbing market share by deeply discounting retail e-book prices, Apple championed the “agency model,” under which publishers set retail prices and vendors such as Apple take a percentage.
Justice, contending the agency model constitutes e-book price-fixing, sued Apple and five publishers that adopted it.
Hachette Book Group, Simon & Schuster and HarperCollins deny wrongdoing but chose to settle and have agreed to create a $69 million fund to provide credits to affected book buyers. Apple and Amazon have notified customers of that plan, though the settlement and the fund still need final court approval, and Apple is likely to appeal.
But Apple remains on track to fight Justice in court next year — and Penguin, along with Macmillan, also chose to go to trial. But now, Penguin might not follow through.
Publishers Weekly reported it had been told by Penguin Group's chairman that preparations for trial next June continue, but Penguin's discussions of the merger with Justice, plus further discussions with Random House, could lead it to change its approach to the litigation.
That wouldn't change whatever merit Apple's case has. But by thinning the ranks of those still opposing Justice, it would give the impression that Apple faces more of an uphill battle — and that the price-fixing litigation and its planned merger with Random House are strongly linked in Penguin's thinking.
The merger complicates Penguin's role in the Justice lawsuit. The lawsuit also makes those merger plans, and Apple's defense of its agency model, more complicated than they'd otherwise be. And it'll be months, perhaps years, before this all shakes out for e-book readers who just want a competitive market offering the best possible selection and prices.
Two titles of interest available Nov. 13:
“The Outpost: An Untold Story of American Valor” by Jake Tapper (Little, Brown and Co.) — ABC News' senior White House correspondent recounts the vicious 6 a.m. attack that nearly 400 Taliban fighters launched on Oct. 3, 2009, against the 53 U.S. troops at Combat Outpost Keating. The Americans won, but the battle ranks as one of the deadliest for U.S. forces in Afghanistan. The U.S. then abandoned and bombed the outpost — and a Pentagon probe would later find “there was no reason for Outpost Keating to have been there in the first place,” according to the publisher.
“The Joy of Hate: How to Triumph over Whiners in the Age of Phony Outrage” by Greg Gutfeld (Crown Forum) — The author, known for hosting “Red Eye” and co-hosting “The Five” on Fox News Channel, provides edgy comedic takes on what the publisher calls “the annoying coddling Americans must endure of ... harebrained liberal hypocrisies.” He advocates “smart intolerance, or ... what we used to call common sense” regarding politically correct double standards, the tea party, the Occupy movement, mainstream media and less political annoyances, such as “pretentious music criticism” and “snotty restaurant hostesses.”
Alan Wallace is a Trib Total Media editorial page writer (412-320-7983 or firstname.lastname@example.org).
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Kovacevic: Enough of these Steelers already
- Penguins’ Orpik out; Neal to have phone hearing
- Penguins players are not out looking for fights
- Steelers WR Brown says ‘I thought I had it clean’ after wild, near-miss finish
- Likely loss of Steelers draft pick looms because of Tomlin misstep
- Cranberry woman wins Miss Pennsylvania USA pageant
- Multi-vehicle crash closes Route 22 in Murrysville
- Pitt to face MAC champ Bowling Green in Little Caesars Pizza Bowl
- Steelers’ NFL playoff hopes are all but gone in loss to Dolphins
- Defensive lapses against Dolphins outweigh positives for Steelers
- Allegheny, Beaver, Butler, Washington, Westmoreland counties weigh shale gas drilling on public land