Writers Guild East: Justice Dept. Should Tackle Hollywood Mergers, Too

Writers Guild East: Justice Dept. Should Tackle Hollywood Mergers, Too

Two days after a judge blocked the planned sale of publishing giant Simon & Schuster to Penguin Random House, The Writers Guild of America East is calling for the government to similarly scrutinize consolidation in Hollywood.

“We applaud the approach taken by the court, advocated by the Department of Justice, to analyze the broader impact of proposed mergers – in particular the impact on the people who do the work, in this case the writers who craft fiction and nonfiction stories,” the Guild, which represents writers of film, television, podcasts and news in collective bargaining, said in a statement on Wednesday. “We believe a similar analysis should apply to potential mergers of media companies in the entertainment and news business, companies that compete for the services of our members who craft fiction and nonfiction stories for the screen, television, streaming, podcasting, and other online media.”

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The guild added, “The fewer the options for writers to pitch their stories, the fewer their opportunities to get hired, the harder it is for them to get paid enough to sustain their careers.”

U.S. Circuit Court Judge Florence Y. Pan put a stop to the merger in an order on Monday that stated that the Department of Justice had effectively shown that “‘the effect of [the proposed merger] may be substantially to lessen competition’ in the market for the U.S. publishing rights to anticipated top-selling books.” A representative for Penguin Random House responded that the publishing house would appeal the ruling and that the company “strongly disagree[s]” with the decision.

The Writers Guild of America at large has recently made a major push to oppose megamergers in the media landscape, with the union’s western branch publishing a 14-page report in December 2021 that argued for greater antitrust enforcement and opposing the Amazon-MGM merger in a co-authored letter to the Federal Trade Commission. In May, Writers Guild of America West board member and The G Word With Adam Conover creator Adam Conover spoke about his own experience with entertainment megamergers in a listening forum with the FTC and DOJ.

On Tuesday, the Writers Guild of America West also connected the Simon & Schuster decision to conditions in the entertainment industry, calling the blocked merger a “tremendous victory for authors who, like screen and television writers, try to make a living selling their work to powerful conglomerates” in a statement. The guild added, “DOJ’s successful case against the Penguin Random House-Simon & Schuster transaction shows the vital importance of challenging mergers that harm workers and lays a path for more efforts to stop the endless cycle of corporate consolidation.”

ViacomCBS (now Paramount Global), the parent company of Simon & Schuster, first announced the over $2 billion sale in November 2020. In its November 2021 complaint about the merger, the Department of Justice not only discussed the sale’s alleged anticompetitive effects but argued that it “would harm a wide spectrum of authors who benefit from competition between Penguin Random House and Simon & Schuster today” and “would likely result in authors earning less for their books.” The ensuing trial looped in star author Stephen King, who testified that “consolidation is bad for competition” and that “it becomes tougher and tougher for writers to find money to live on.”

On Tuesday, Doug Preston, president of the professional advocacy organization The Authors Guild, called the court decision “the first time a court has recognized what authors and the Authors Guild have been arguing for decades — that a consolidation among publishers hurts authors. It leaves authors with fewer potential buyers of their manuscripts, which restrains their power to negotiate advances and other terms.” The Authors Guild said it consulted with DOJ attorneys about the sale, and that some of its points appeared in the DOJ’s lawsuit.

Added Authors Guild CEO Mary Rasenberger, “The decision is particularly exciting for us because it shows that the court understands that monopsonies — the concentration of power among one or a few large buyers — are as harmful to competition as monopolies where sellers control pricing.”