Blocked M&A in the publishing industry | 232

Summary

---

Podcast Summary

Podcast: Down to Business English
Episode: Blocked M&A in the Publishing Industry | 232
Date: November 27, 2022
Hosts: Skip Montreux & Des Morgan

---

Episode Overview

This episode of Down to Business English delves into the blocked merger between two major publishing houses, Penguin Random House and Simon & Schuster, and explores the legal, economic, and industry implications of a U.S. court’s decision to halt the deal. The hosts, Skip and Des, explain the international scope of the deal, the arguments for and against the merger, and discuss why the court’s decision is significant for authors, publishers, and readers alike.

---

Key Discussion Points & Insights

1. Updates on Previous News Stories

• Brazilian Presidential Election (04:11)

  • Lula da Silva narrowly won with 50.9% over Bolsonaro’s 49.1%.
  • Quote: “Inacio Lula da Silva is Brazil’s new president, but with a much smaller mandate than most people anticipated.” – Skip (04:21)

• UK Political Updates (04:50)

  • Liz Truss resigned as UK Prime Minister; Rishi Sunak took office.
  • Quote: “Rishi Sunak has now taken on the job and has broken a few records in the process.” – Des (05:03)
  • Sunak is the youngest modern PM, first of Asian descent, and notably wealthy.
  • Quote: “Sunak’s father in law is the founder of Indian tech giant Infosys… £629 million.” – Des (05:51)

2. The Publishing Mega-Merger: Background (06:30)

• International Dimensions:

  • Penguin is British, Random House is American (merged in 2013), both are now owned by Bertelsmann, a German company.
  • Simon & Schuster, American, is the 4th largest US publisher.
  • Quote: “Penguin is a British publishing house and they merged with the American Random House in 2013… owned by a German company, Bertelsmann.” – Des (07:19)

• Author Prestige:

  • Penguin Random House: published George Orwell, Virginia Woolf.
  • Simon & Schuster: home to Stephen King.

3. Why Was the Merger Blocked? (08:31)

• Author Concerns:

  • Stephen King testified against the merger, fearing fewer options and worse contracts for authors.
  • Quote: “Stephen King was dead against the merger as he thought that it wouldn’t help authors get the best financial deal for their work.” – Des (08:31)
  • King likened the idea of post-merger competition to “a husband and wife bidding against each other to buy the same family home.” (09:06)

• Arguments from Penguin Random House:

  • Claimed both publishers would continue to compete.
  • The court disagreed, agreeing with King’s anti-competitive concerns.

• Legal Ruling:

  • A U.S. court blocked the deal (Nov 1, 2022), calling it anti-competitive.
  • Combined company would control nearly half the market for popular books in the U.S. and UK.
  • Quote: “They would have controlled nearly half of the publishing market for popular books in the United States and the UK.” – Des (09:41)

4. Broader Context (09:55)

• U.S. Government Stance:

  • Decision aligns with Biden administration’s focus on preventing anti-competitive practices.

• Penguin Penguin Random House’s Response:

  • Announced plans to appeal, citing potential synergies and cost savings.
  • Quote: “Penguin has said that it will be appealing the decision, which it described as an unfortunate setback for readers and authors.” – Des (10:13)

5. Industry Tidbit: Upcoming Publication (10:42)

• Penguin Random House is about to publish Prince Harry’s memoir “Spare,” tying in with the episode’s vocabulary later.

---

Notable Quotes & Memorable Moments

• On Monopoly (09:41):
  “They would have controlled nearly half of the publishing market for popular books in the United States and the UK.” – Des

• On the Reality of Competition Post-Merger (09:06):
  “He compared that to a husband and wife bidding against each other to buy the same family home.” – Des, referring to Stephen King’s testimony

• On Synergies (10:13):
  “The combined company would be able to save costs as synergies between the two companies could be explored.” – Des

• On Succession (10:54):
  “‘Spare’… comes from the saying that every monarch should have an heir and a spare.” – Des

---

Vocabulary Section (“Down to Vocabulary”) Highlights

Begins at 13:22

Key terms relevant to the episode and the industry:

• “At the helm” — to be in charge (13:22)
• “Respectively” — referring to items in the same order mentioned
• “Monopoly” (16:11) — a company’s dominance in the market
• “Synergy” — operational or financial efficiency from a merger (18:11)
• “Heir” — person entitled to inherit (19:10)

Examples are drawn from both the episode content and broader business contexts, further helping listeners build business English vocabulary.

---

Important Timestamps

| Time | Segment / Topic | |-----------|--------------------------------------------------| | 04:11 | Update: Brazilian Presidential Election | | 04:50 | Update: UK Political Situation / Rishi Sunak | | 06:30 | Introduction to the Blocked Publishing Merger | | 07:19 | Penguin Random House background | | 08:31 | Stephen King’s opposition to the merger | | 09:41 | Market share and anti-competitive concerns | | 10:13 | Penguin’s planned appeal, synergy arguments | | 10:42 | Prince Harry memoir detail (industry tidbit) | | 13:22 | Beginning of Down to Vocabulary business English |

---

Tone and Style

The conversation is accessible, engaging, and lightly humorous, even as it examines significant industry and legal topics. The hosts frequently use lively examples and analogies, keeping the subject fresh and relevant.

Example of tone: “Oh, poor Harry. That must be quite difficult to live with knowing you are the additional child in the family.” – Skip (11:17)

---

Conclusion

The episode provides a thorough yet engaging explanation of why the Penguin Random House and Simon & Schuster merger was blocked—illuminating anti-competitive issues, legal rationale, and industry context. Listeners gain insight into the inner workings of the publishing industry, the importance of maintaining competition, and how business English terms apply in real-world news stories. The “Down to Vocabulary” segment at the end ensures key business language is reinforced in context.

---

Transcript

[A]

Hi, everyone. Skip Montreux here. Just before we get into today's episode, I wanted to let all of you know about down to Business English's Black Friday Cyber Monday sale. Until Wednesday, November 30, you can get a D2B executive director membership for 30% off the regular price. What do you get with a D2B membership? First, members only episodes. Second, automatic delivery of audio scripts for newly released episodes. And third, complete access to D2B's audioscript library. So if you find down to Business English useful in your English learning routine, if you enjoy the content, the topics and stories we report on, if you get value from the down to Vocabulary portion of the podcast, you should become a member today. Just visit the down to Business English website and click on the membership link at the top of the page. Remember, the Black Friday Cyber Monday sale ends on Wednesday, November 30th.

[B]

From Tokyo, Japan and Sterling in the United Kingdom, this is down to Business English with your hosts, Skip Montreux and Des Morgan.

[A]

Des, I have to say, with you now living in Changsha, China, it is so much easier for us to get together and record now that we are almost in the same time zone.

[C]

Yeah, it sure is a big improvement for us, Skip. But what have you been up to anyway?

[A]

Honestly speaking, I have been working furiously on the D2B website.

[C]

Really? I haven't noticed any changes.

[A]

Well, you wouldn't yet. I've been working on everything in a local development environment on my computer. But I hope I can take take everything live sometime this month, sometime later in November. I will keep you posted and I

[C]

will look forward to that.

[A]

How about you, Daz? What's happening on your end?

[C]

I'm getting settled into my new life in China. Of course. You know what though? There are always lots of small things you need to find when you move to a new place. Luckily though, it was singles Day on November 11, so there were lots of sales on.

[A]

Oh, that's right. Singles Day in China is kind of like a Black Friday Cyber Monday situation.

[C]

It's more like the opposite of Valentine's Day.

[A]

Oh, why do you say that?

[C]

Because Singles day is the 11th day of the 11th month and is an unofficial holiday here in China when single people are encouraged to treat themselves to something they've long wanted.

[A]

Okay, I get it. November 11, 1111 1111. There are a lot of lonely ones in that faith. So, Des, did you get anything for yourself?

[C]

Yeah, I sure did. You know what? I got a really good deal on a bicycle to ride to work. Oh, And a few sort of small items for the kitchen.

[A]

Well, it sounds like you are making yourself at home there in Changsha.

[C]

Slowly but surely, yes.

[A]

In the news, two stories that we covered recently on D2B have developed a little bit.

[C]

That's right. In D2B 229, when we reported on the presidential elections in Brazil, it was before the October 31st runoff. So the winner hadn't yet been decided.

[A]

That's right. Only the first round of voting had taken place at that time.

[C]

So do you have an update for us?

[A]

I do. On October 31, the second round of voting took place and it was very close, 50.9% to 49.1% for Lula. So Inacio Lula da Silva is Brazil's new president, but with a much smaller mandate than most people anticipated.

[C]

Well, that's one story updated. The the other Update is from D2B227 where I reported on the political chaos in the UK stemming from Liz Truss Mini Budget.

[A]

And Liz Truss is no longer at the helm in Britain.

[C]

She has resigned. Yes. I think most Britons would agree with me when I say fortunately she is no longer our leader. Rishi Sunak has now taken on the job and has broken a few records in the process.

[A]

Records?

[C]

At 42, he's the youngest PM in recent times, narrowly beating David Cameron who was 43 when he took office. He's also Britain's first PM of Asian descent and as a Hindu, the first non Christian.

[A]

Isn't he also the richest Prime Minister in UK history?

[C]

Yes, that's also true. Sunak's father in law is the founder of the Indian tech giant Infosys, currently valued at 3.9 billion pounds. Although his wife only has 0.9 of a percent of the shares, that still comes to a staggering 629 million pounds.

[A]

Wow. Well, I think it is fair to say that they are doing okay then.

[C]

Yeah, it certainly looks that way.

[A]

So those are some updates on some stories we have recently covered on down to business. English Des, do you have a new story for us to look at today?

[C]

I do.

[A]

About China?

[C]

Not this time, no. Today's report features companies owned in the us, the UK and Germany and a legal ruling made in a US court.

[A]

Hmm, this story has quite the international flavor.

[C]

Sure does. So let's do it. Let's get D2B down to business. With the planned merger of two major penguin, random House and Simon and Schuster. And why a US court has prohibited the merger from going ahead.

[A]

I have heard of Random House and I have certainly Heard of Simon and

[C]

Schuster as the US's first and fourth largest publishers respectively. I would guess that most people have at least heard the names of, or more likely have read one of the authors published by these two famous publishers.

[A]

But what exactly is Penguin Random House though?

[C]

Penguin is a British publishing house and they merged with the American random house in 2013. Now this gets complicated because Penguin and Random House are owned by a German company, Bertelsmann. And that's the German connection.

[A]

Okay, so Penguin Random House, their parent company, is a German company, Bertelsmann.

[C]

Okay, that's right, Bertelsmann. That's correct. So as I've said, they became the US's largest publisher. Penguin's been around since 1935 and has published a long list of literary heavyweights, including George Orwell and Virginia Woolf.

[A]

I make it a point to read Orwell's Animal Farm once a year.

[C]

I didn't know you were an Orwellian.

[A]

He is one of my favorite British writers. How about Simon and Schuster, who are some of their big names?

[C]

Probably the most famous author published by Simon and Schuster would be Stephen King.

[A]

Ah, yes. I like a little bit of horror. And Stephen King is definitely the undisputed king of horror.

[C]

Oh, nice play on words there, Skip. Incidentally, Stephen King was dead against the merger as he thought that it wouldn't help authors get the best financial deal for their work.

[A]

I can see why he would be concerned. If a writer doesn't have an option to change publishers, they would just have to accept whatever contract they were offered.

[C]

However, penguins, Daniel Petrichelli said the two publishers would still compete against each other even after the merger.

[A]

Okay, and how did Stephen King react to that?

[C]

Not well. He compared that to a husband and wife bidding against each other to buy the same family home.

[A]

Okay, so in other words, he was saying it made no sense or that

[C]

at the end of the day it just wouldn't happen.

[A]

Right. It would never happen.

[C]

And the US court agreed with King when they blocked the merger on November 1, they said it would be anti competitive. If one company has a monopoly in any particular sector, then there will be less incentive to be competitive.

[A]

How big would that combined company have been?

[C]

They would have controlled nearly half of the publishing market market for popular books in the United States and the uk.

[A]

Hmm. So although not an out and out monopoly, still an enormous player in the sector.

[C]

Yeah, yeah, they would have been huge. Interestingly, this court decision comes at a time when the Biden administration is focusing very closely on anti competitive practices.

[A]

Now tell me, are the two companies planning on appealing the US Court's decision.

[C]

Penguin has said that it will be appealing the decision, which it described as an unfortunate setback for readers and authors. I guess their argument is that the combined company would be able to save costs as synergies between the two companies could be explored.

[A]

That is the usual argument behind mergers and acquisitions. Isn't Random House Penguin about to publish Prince Harry's memoir?

[C]

Oh, you're very well informed, Skip. Prince Harry's memoir, titled Spare, will be published on January 10th next year.

[A]

Spare? That's an odd title.

[C]

It comes from the saying that every monarch should have an heir and a spare.

[A]

Ah, like a spare tire. An extra tire you carry around with you in your car in case you have a flat tire during your travels and have to replace it.

[C]

Exactly. So Prince William is the he, Harry is the Spare, the extra in case something happens to William.

[A]

Oh, poor Harry. That must be quite difficult to live with knowing you are the additional child in the family.

[C]

Sure, but he has still had a life of privilege and untold wealth. You know what? I wouldn't mind being the Spare. In a lot of ways. It's probably easier than knowing that you will have to take the responsibility of being King one day, I suppose.

[A]

And on that note, I think it is time for us to get D2V down to vocabulary.

[B]

Do you find down to Business English useful in your English studies? Would you like to support the show? Consider becoming a D2B member today. Down to business English memberships come with three great benefits. First, D2B members receive bonus content in the form of exclusive members only episodes. Second, within moments of a new episode being released, an audio script is automatically emailed to you. There is no need for D2B members to go through the time consuming process of visiting the website, logging into their account, locating an episode, and then downloading the audio Script file. And third, D2B members have 100% access to the entire library of audio scripts all the way from season one Episode one right up to the most recently released episode. Interested in becoming a member? Just visit the down to Business English website and click on the membership link at the top of the page.

[A]

I will get D2B started with the expression to be at the helm. This is originally a naval expression that simply means to be steering a ship.

[C]

The helm is the wheel or steering position, right?

[A]

And idiomatically, when you describe someone as being at the helm, you are saying that they are in control or are in charge. In the introduction to today's episode, when DEZ and I were giving up dates on past stories. I used this expression in the negative when I commented that Liz Truss was no longer at the helm in Britain,

[C]

which simply means that she was no longer in charge of the uk. To which I ruefully added that most people in the UK were quite happy about that.

[A]

Ruefully?

[C]

Yes, ruefully.

[A]

Sorry, Ted. Ruefully is not a word I use very often.

[C]

It means to do something in a way that expresses regret. So I regretted that I had to say that most Brits were happy to see trust gone.

[A]

Hmm, look at that. A bonus word in D2V today. Getting back to at the helm, can you give us an example using it in a business context?

[C]

Des sure can. Lots of the staff at Twitter were very concerned about losing their jobs when Elon Musk told took the helm.

[A]

And as it turned out, they weren't wrong to be concerned. Musk fired almost half of the Twitter workforce.

[C]

3,500 employees to be exact.

[A]

Lots of out of work Twitterers on the street today looking for a new job.

[C]

Sad. Okay, now let's move on to the adverb respectively. This word is really useful when you want to refer to two or more more things in the same order that you've already mentioned them.

[A]

You often hear speakers use respectively when they are giving presentations.

[C]

You do. It's very useful. In the story I said that Random House and Simon and Schuster are the largest and fourth largest publishers in the US Respectively. I was indicating that the first one mentioned Random House is the largest and the second one, Simon and schuster is the fourth largest.

[A]

The largest smartphone maker globally is Apple with 23% of the market, while Samsung and Xiaomi in second and third places have 18.8% and 12% of the market respectively.

[C]

So Samsung has 18% and Xiaomi has 12%?

[A]

Precisely.

[C]

I did not know that. Do you have another word for a skip?

[A]

I do. Next we have the noun monopoly. A monopoly is a company that is the only company to sell a particular product or provide a service.

[C]

NTT in Japan used to be a monopoly. I think at one time they were the only company to offer telecommunications services in Japan.

[A]

I'd have to fact check that, but I'm pretty sure you are right there. Now when you say a company has a monopoly on something, you are saying that it is too dominant in a particular industry.

[C]

Yes, that is how it was used in today's story.

[A]

In the story, Des pointed out that the merger between Penguin, Random House and Simon and Schuster would give the merged company a monopoly in the sector. Sure there would still be other publishing houses in the market, but this huge Penguin, Random House, Simon and Schuster thing. They would be too dominant.

[C]

And as I said, monopolies are anti competitive as a single company controls too much of the market.

[A]

Can you give us an example of an existing monopoly?

[C]

Sure. Intel has a considerable monster monopoly in the semiconductor market. They have a 75% share, although AMD has been catching up a bit over the last few years.

[A]

Good example. Now we should also point out that this word monopoly can easily be used as a verb as well.

[C]

It can indeed.

[A]

If you want to communicate that something is too dominant, you can use the verb form monopolize. For example, my time in the office this morning was completely monopolized by writing emails to my clients.

[C]

Oh, lucky you. My morning is usually monopolized by meetings. I would much prefer to be writing emails Interesting.

[A]

What is the next Item on the D2V list?

[C]

Des the business noun synergy.

[A]

Synergy? A very useful business term and often

[C]

use used in the plural synergies. It refers to the areas where savings can be made or efficiencies gained when two companies join together. In the story, I discussed how synergies are often given as the reason why mergers are considered a positive development.

[A]

A good example would be when Amazon acquired the audiobook company audible back in 2008.

[C]

I remember when that happened. I'm a big Audible user and found it quite convenient that I could access my Audible library by logging into my Amazon account.

[A]

That would have been one of the synergies created by the merger. Another even more powerful synergy was the ability to bundle a print book and an audiobook into a single purchase.

[C]

That merger is a very good example of synergy.

[A]

Our final word on D2B today is the noun heir. An heir is the person who has the legal right to receive someone's property or title when that person, usually a parent, dies or retires. In the story, Des noted that Prince William is King Charles's heir and will take over as king after his father dies or retires.

[C]

Just like Charles was Queen Elizabeth's heir and that's why he's now king. It's interesting to note that an heir doesn't necessarily have to be a son or daughter.

[A]

No, it doesn't. Can you give us an example using Air in this way it was often

[C]

said that the band Oasis were the natural heirs to the Beatles sound.

[A]

Oh really?

[C]

Yes. The sound Oasis produced was very similar. Similar to the sound created by the Beatles.

[A]

Hmm. So Oasis were the heirs to the Beatles?

[C]

Yes, they kind of took that particular genre over even though it was some time after the Beatles had disbanded.

[A]

But you hear Beatles songs in movies and on the radio all the time. How often do you hear Oasis?

[B]

Would you like to support down to business English help D2B reach more people wanting to improve their business English skills? Be sure to subscribe to down to Business English on Apple podcasts or any place podcasts are found. While you are there, why don't you leave a rating and a review down to Business English Business News to improve your business English.

[A]

Thanks for that report on the now blocked merger between Penguin Random House and Simon and Schuster, Des.

[C]

You are more than welcome. We will have to keep an eye on whether or not Penguin is going to move forward with the appeal.

[A]

Yes we will. The publishing industry is one industry. We should cover more on D2B in general. It is, after all, a huge, massive market.

[C]

There's no doubt about that. And we have a tendency to let business tech stories monopolize our attention. On D2B, I'd say technology, finance and political stories are topics that we cover a lot.

[A]

I would agree. Perhaps maybe 30%, 20% and 15% respectively.

[C]

Maybe a little less.

[A]

Well, as long as we are at the helm of D2B, we will do our best to bring our listeners a wide variety of business and political news.

[C]

A worthy objective.

[A]

Thanks for listening everyone. See you next time.

[C]

Bye for now.

[B]

Have a comment or question about today's show? Don't be shy. Visit the D2B website or Facebook page and post any comments or questions there. Skip Des or Samantha will be sure to leave a reply. Down to Business English Business News to improve your business English.