ViacomCBS received more than half a dozen inquiries from interested buyers, including financial firms and the French media giant Vivendi, which holds a minority stake in Hachette through the publisher Lagardère. The top three contenders were Bertelsmann, Rupert Murdoch’s News Corp, which owns HarperCollins, and Vivendi. News that Bertelsmann was close to a deal was reported earlier by The Financial Times.
The merger will be reviewed by President-elect Biden’s team, according to Erik Gordon, professor at the Ross School of Business at the University of Michigan. The incoming administration, he said, “will be tougher than the prior administration’s team and more sympathetic to the plight of authors who will have less ability to negotiate deals or even get published.”
He added that regulators could seek what are known as “structural remedies” where Penguin Random House would have to sell off other divisions or imprints as a condition of the merger. The company would have to spin off or sell a large enough chunk to create “viable competitors,” he said.
A spokesman for Bertelsmann said Penguin Random House had lost market share in recent years and cited Amazon as a competitive threat to the overall book market. The combination of Penguin Random House and Simon & Schuster would be “below 20 percent,” the company said, citing data from the Association of American Publishers, an industry trade group.
The sale could also have a ripple effect throughout the literary ecosystem. The biggest houses are better equipped to negotiate favorable terms with major retailers like Amazon, Barnes & Noble and the big box stores, and are also able to develop direct-to-consumer marketing and sales networks so that they are not as dependent on retailers.
For literary agents and authors, the wave of consolidations has meant fewer potential buyers for books from authors without a proven track record.
“There are projects that would have sold for $150,000 years ago that might not sell at all now to the big five, whereas the book that would have sold for $500,000 might go for a million,” said the literary agent David Kuhn. “They would rather go in bigger for the thing that they have the most consensus on.”