Murdoch has good reason to ruin publishing deal

Paramount Global

24/03/2021 17:19

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Jennifer Saba
    NEW YORK, March 24 (Reuters Breakingviews) - Rupert Murdoch
is not shy about applying pressure. News Corp  NWSA.O , the
company he chairs, has griped publicly to protect its interests
on Big Tech. Now he’s taking on big book publishing. Regulators
in the United Kingdom are probing a publishing deal between News
Corp rivals Bertelsmann  BTGGg.F  and ViacomCBS’s  VIACA.O 
Simon & Schuster. Scuttling a tie-up via regulators could set
the $15 billion media company up in pole position.
    British watchdogs are investigating whether Bertelsmann’s
$2.2 billion proposed takeover last November for its smaller
peer is anticompetitive. The tie-up would mean Penguin Random
House, a giant itself created when Pearson sold Penguin to
combine with Bertelsmann’s unit in 2013, would swallow
ViacomCBS’s publishing assets.
    News Corp Chief Executive Robert Thomson, who oversees the
company’s publishing unit HarperCollins – and according to press
reports, was a bidder for Simon & Schuster – has been vocally
opposed. Thomson has described Bertelsmann as a “book behemoth,”
“literary leviathan” and the deal itself as “anti-market logic.”
    He isn’t alone. The Authors Guild along with others
petitioned the U.S. Department of Justice to scrutinize the deal
because it would result in the German group controlling 70%
share in the U.S. literary and general fiction market and
several other genres including politics and coming-of-age. That
could give Bertelsmann outsized power over writers, distributors
and retail shops.
    Still, News Corp has its own chapter to write. HarperCollins
makes up one-fifth of the company’s business. The unit hit a
record last quarter as well, when revenue rose 23%
year-over-year to $544 million in the three months ending
December, while EBITDA jumped 65% to $104 million. The newspaper
business’s value has increased, but that division has tough
competition through the likes of social media, and overall,
publishing is seeing brighter days. U.S. print book sales had
their best year since 2010 with unit sales rising 8% last year,
according to NPD. 
    If Bertelsmann succeeds, the number of major publishing
houses will shrink from five to four. That makes HarperCollins,
which represents about 10% of the U.S. book market, a relatively
less significant player. But if regulators stand in the way of a
deal, News Corp not only keeps competitors from getting
stronger, it’s better positioned to consolidate the market on
its own terms. 
    On Twitter https://twitter.com/jennifersaba
         
    CONTEXT NEWS 
    - Regulators in the United Kingdom are investigating whether
Penguin Random House’s $2.2 billion proposed takeover of Simon &
Schuster may hurt competition, Reuters reported on March 22. 
    - Penguin Random House said in a statement it is working
with the UK Competition and Markets Authority in its review. 
    - ViacomCBS agreed on Nov. 25 to sell its publishing
division, Simon & Schuster, to Bertelsmann, the owner of Penguin
Random House.
    - For previous columns by the author, Reuters customers can
click on  SABA/ 
    - SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS http://bit.ly/BVsubscribe
  

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Britain probes publisher Penguin's $2.2 bln Simon & Schuster
deal     urn:newsml:reuters.com:*:nL4N2LK23F
BREAKINGVIEWS-Rupert Murdoch’s ESG flaws hurt more than ever   
 urn:newsml:reuters.com:*:nL4N2K91RM
BREAKINGVIEWS-Murdoch lets Bertelsmann pay up for publishing   
 urn:newsml:reuters.com:*:nL8N2IB4U8
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Editing by Lauren Silva Laughlin and Amanda Gomez)
 ((jennifer.saba@thomsonreuters.com; Reuters Messaging:
jennifer.saba.thomsonreuters.com@reuters.net))