Stephen King goes to fight for the United States government in a case against the megamerger of book publishing

WASHINGTON, Aug 1 (Reuters) – The U.S. Justice Department asked a federal judge on Monday to block a $2.2 billion merger between two of the “Big Five” book publishers, Penguin Random House and Simon & Schuster, in a lawsuit that expected to feature testimony from horror author Stephen King.

“It̵[ads1]7;s real money for real people,” said Justice Department attorney John Read.

Also on Monday, in the same federal courthouse in Washington, the Justice Department argued to another judge that UnitedHealth Group’s ( UNH.N ) $8 billion deal to buy Change Healthcare ( CHNG.O ) should be stopped. read more

In the publisher merger attempt, the government is focused not on what consumers pay for books, but on advances paid to the most successful authors, especially those who get $250,000 or more.

“The evidence will show that the proposed merger is likely to result in authors of expected best-selling books receiving smaller advances, meaning that authors who work for years on their manuscripts will be paid less for their efforts,” the government said in a pretrial brief .

The government also intends to show that there was concern among the merger parties that the agreement is not legal. It previously disclosed an email sent by Simon & Schuster CEO Jonathan Karp that wrote: “I’m pretty sure the Justice Department wouldn’t allow Penguin Random House to buy us, but that’s assuming we still have a Justice Department.”

King, author of “The Shining,” “Carrie” and other blockbusters, will testify for the government, along with publishing executives and writers’ agents.

Hachette Book Group CEO Michael Pietsch is set to testify on Monday, while King is expected to testify on Tuesday.

Penguin Random House, the largest book publisher in the United States, said it plans to buy rival Simon & Schuster in November 2020. Penguin Random House is owned by German media conglomerate Bertelsmann ( BTGGg.F ). Simon & Schuster is owned by ViacomCBS, now Paramount Global ( PARA.O ). The Ministry of Justice filed a lawsuit in November 2021. read more

The defense, led by attorney Daniel Petrocelli who defeated the Trump administration’s 2018 bid to stop AT&T Inc ( TN ) from buying Time Warner, argued that the market for books, and for publishers to win best-selling authors, is competitive and that the merger would do it even more.

The government is asking the court to block the merger “for less than 100 books a year,” Petrocelli said in opening arguments, rejecting the idea that the biggest booksellers would be able to reduce advances.

The publishers will argue that the evidence shows that in bidding on potential bestsellers Penguin Random House and Simon & Schuster “are rarely the top two bidders.”

The top five publishers are Penguin Random House, HarperCollins, Macmillan, Simon & Schuster and Hachette, with Walt Disney Co ( DIS.N ) and Amazon.com Inc ( AMZN.O ) also in the market. HarperCollins is owned by News Corp (NWSA.O).

Judge Florence Pan of the US District Court for the District of Columbia will decide whether the deal can go forward. The trial is expected to last two to three weeks.

Reporting by Diane Bartz and by David Shepardson in Washington; Editing by Matthew Lewis and Mark Porter

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