Report: “Penguin Random House’s C.E.O. Defends Bid to Buy Simon & Schuster”

From The NY Times:

Madeline McIntosh, the chief executive of Penguin Random House U.S., took the stand on Monday to defend its bid to buy the rival publishing house Simon & Schuster.

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The slice of the market that the government has focused on are books that earn advances of $250,000 or more, which it called “anticipated top-selling books.” It says that the five largest publishers in the country — which include Penguin Random House, the biggest; and Simon & Schuster, the fourth largest — compete mainly against one another to buy those titles, and if the number of publishers were to shrink, so too would the competition.

Penguin Random House argued that the industry is vast and varied, extending far beyond its biggest players, and that the government has focused on a tiny sliver of deals, in which Penguin Random House and Simon & Schuster are the final bidders for these expensive books. The company also said that the “anticipated top-selling books” category that the government has focused on does not exist as a distinct segment of the market.

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Additional Coverage From Courthouse News

On the stand, she [Madeline McIntosh] faced questioning from U.S. District Judge Florence Pan about the extent to which Penguin competes with the nation’s second-largest publisher of trade books, HarperCollins, given that, in sales of Christian books, the playing field is uneven.

If you discount Christian sales, Pan pushed, Penguin Random House would be “like three times their size.”

Penguin CEO Madeline McIntosh tried to play down the gap.

“I do think they compete with us in Christian sales,” she said.

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Pan noted Monday that McIntosh’s testimony makes it seem that the publishing industry is “very much driven” by the speculative sales of books.

“I would say we spend a lot of time trying to guess the expected sales of books,” McIntosh said. “And we try to drive towards maximizing that number.”

And when it comes to determining how much Penguin Random House pays authors in advances for books, McIntosh said it is based on a combination of the expected sales, as well as the type of book.

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