On Monday, as lawyers for Penguin Random House and the Department of Justice were sharpening their sabres ahead of the antitrust duel of the summer, CEO Jonathan Karp fired off an email to his approximately 1,500 employees at Simon & Schuster, the nearly century-old publishing house that Karp has lorded over for the past two years. The fate of Simon & Schuster—whose catalog stretches from the classics of Fitzgerald and Hemingway, to the mass-market gold mines of Stephen King and Mary Higgins Clark, to the recent political blockbusters of Bob Woodward and Mary Trump—has hung in the balance since the publisher was put on the block in March 2020 by its parent company, now called Paramount Global, which arose from the tortured recombination of Viacom and CBS, whose focus on mounting an offensive in the streaming wars leaves little room to manage a comparatively antiquated book-publishing business.

Almost nine months after the sale was announced, Bertelsmann’s PRH bested Rupert Murdoch’s HarperCollins with a $2.18 billion bid for S&S, a proposed mash-up that would turn the Big Five publishers into the Big Four. However, the Champagne toasts turned out to be premature: Last November, Joe Biden’s merger-averse DOJ sued to block the deal, citing concerns that it would give the world’s largest book publisher “unprecedented control” over the industry, resulting in “lower advances for authors and ultimately fewer books and less variety for consumers,” a string of claims that PRH characterizes as ludicrous. S&S has been in limbo ever since—a discontinued operation as far as Paramount Global’s earnings releases are concerned, and yet still bereft of its suitor’s embrace.

Which brings us back to Karp’s memo, a sort of pep talk to counteract the lingering uncertainty. “As I’ve told you before, I am hopeful that Simon & Schuster will become part of Penguin Random House,” wrote Karp, a 58-year-old former reporter and theater buff who rose up to become one of the most powerful and highly regarded figures in the publishing industry. “I spent 16 years at Random House, and I know their culture is a lot like ours—wholeheartedly devoted to books and deeply committed to its employees and authors. Penguin Random House’s parent company, Bertelsmann, has been in the book business since 1835 and shares Penguin Random House’s profound commitment to improve public readership. I strongly believe that Penguin Random House will be an excellent steward of Simon & Schuster’s legacy, and that we, and our authors, will benefit greatly from becoming a part of this superb publishing company.”

The fate of S&S will soon be decided one way or another, with PRH and the DOJ gearing up to face off in court. The bench trial is set to begin Monday, adjudicated by Judge Florence Pan at the U.S. District Court in Washington, D.C. Three weeks have been allocated for the trial, which is slated to run from August 1 to August 19. The attorneys will then have until September 7 to submit any additional briefings to the court, and Pan is expected to rule sometime in November. The witness list is stacked with A-listers from the publishing world, including executives from S&S and PRH, as well as top literary agents and authors. Karp and Penguin Random House CEO Markus Dohle are both due to be called, as are King (for the government), Hachette Book Group CEO Michael Pietsch (ditto), and power agents Andrew Wylie (whose client roster includes Vanity Fair), Gail Ross, Joy Harris, and Elyse Cheney. (Those agents and a few others are notably being called by the defense.) The array of potential witnesses includes PRH honcho Andy Ward and the Pulitzer Prize–winning journalist and best-selling author Charles Duhigg. “During the trial, our ability to comment on the testimony and proceedings will be limited,” Karp told his staff. “We will keep you informed of further developments when we have news that we can share.”

PRH buying S&S is a small deal in the grand scheme of things, but the merger is being closely watched insofar as it reflects the Biden administration’s push to stem corporate consolidation. It also has obvious implications for the already much-consolidated publishing space, where there’s skepticism about creating another behemoth in an industry that has been upended by Amazon. As one big shot editor told me when the lawsuit was first announced, “I don’t know anyone who would think this is a great thing to happen.”

Both sides filed their pretrial briefs last Friday. “Penguin Random House’s proposed acquisition of Simon & Schuster would further entrench the largest publishing giant in the United States (and the world) and give the merged company control of nearly half of the market to acquire anticipated top-selling books from authors,” the government’s filing reads. “Indeed, the post-merger combined Penguin Random House/Simon & Schuster would share control of 90% of the relevant market with just three other companies. The evidence will show that the proposed merger would likely result in authors of anticipated top-selling books”—the elite slice of the market in which authors command advances of $250,000 and up—“receiving smaller advances, meaning authors who labor for years over their manuscripts will be paid less for their efforts and fewer authors will be able to earn a living from writing.” (Ironically, the government appears to be looking out for the big guy.) “If allowed to proceed, the proposed transaction would eliminate competition between two of the last remaining major publishers. Penguin Random House and Simon & Schuster are legendary businesses responsible for publishing some of the most esteemed works of fiction and non-fiction in this country’s history. Today, they compete fiercely to win the rights to publish anticipated top-selling books. The evidence will show that many authors have benefitted from this competition, which would disappear if the proposed merger were allowed to proceed, likely leading to lower advances and worse contract terms for authors.”

Hogwash, says PRH, which has retained Daniel Petrocelli, the ace litigator who successfully defended AT&T and Time Warner against the Trump administration’s attempt to scuttle their $85 billion marriage in 2017. “The government found no evidence that combining PRH and S&S would diminish competition in any consumer market. If anything, by making the combined entity a stronger bookselling competitor, the merger will incentivize other publishers to compete even harder for consumer attention,” the filing states. “In short, the merger at most reduces the number of publishers that pose a meaningful competitive threat in any given acquisition from ‘very many’ to ‘still very many, but one fewer.’ Even viewed strictly through the government’s structural lens, the merger changes the effective number of potential acquirors for any given book from six (the five largest plus all others in aggregate) to five.… The government’s anecdotal stories about some acquisitions where PRH and S&S were the top two bidders reflect only a minuscule percentage of actual acquisitions.… The government’s anecdotes are also flawed even on their own terms. Some are simply incorrect and do not represent acquisitions where PRH and S&S were runners up to each other. Many appear to involve best-bid or better-best formats, where the runner up bid is unknown and thus poses no competitive constraint.” Petrocelli additionally argues that PRH, which already allows its imprints to compete against one another, has “publicly assured agents” that the merged companies will allow PRH imprints to bid against S&S imprints even if there are no outside bidders. (For industry types who are fluent in all the nuanced jargon, Publishers Weekly has a more detailed breakdown of the opposing arguments.) 

A win for the government would not appear to bode well for Simon & Schuster. Penguin Random House is already a giant and will be just fine either way. But S&S finds itself in a tricky position that belies its mojo over the past two years. It had a string of red-hot political releases in 2020, from the Mary Trump book and Woodward’s Rage to titles from John Bolton and Sean Hannity. In 2021 it brought a pair of million-copy sellers, Laura Dave’s The Last Thing He Told Me and Mark Levin’s American Marxism, as well as a slew of top sellers from Woodward, King, and others. This year S&S has been riding a TikTok wave that’s propelled sales of books by Colleen Hoover and Taylor Jenkins Reid, in addition to churning out hits from the likes of Jennifer Egan, Jack Carr, and Jennifer Weiner. (Bob Dylan and Mike Pence are on tap for fall.) As the trades reported on the heels of Paramount Global’s latest earnings results in May, Simon & Schuster’s revenue was up 17%, to $217 million, in the first quarter of the year, with operating income soaring 85% to $50 million. Alas, it’s not as if Paramount Global is likely to have a change of heart if the sale doesn’t go through. “S&S is a great company and a great brand,” someone familiar with Paramount Global’s thinking put it, “but it’s not core to the strategy going forward.”

Where would that leave S&S? Perhaps in the hands of “a private-equity firm or some entity aside from the Big Five without the resources to pay the kind of advances that authors always covet,” as my former colleague William D. Cohan posited recently in a column for Puck. “And that’s not a step forward, is it?” HarperCollins (which is my publisher, just for the record) has now gobbled up Houghton Mifflin Harcourt. Hachette now has Workman Publishing. And Vivendi—the French media conglomerate that had also been in the running for S&S—is now tied up with Lagardère. It would be enough of a pickle that sources in the books world have joked (half-joked?) that Amazon might not look like such a bad option. “It’s not a crazy idea,” one of them said.

Of course, as their showdown with the government looms, both publishing houses hope to avert the worst-case scenarios. Karp, for his part, is doing his best to keep chins up. “Regardless of the outcome,” he wrote in this week’s memo, “Simon & Schuster will be celebrating its 100th birthday in April 2024. In our storied history, we have changed ownership seven times, and we know there will be an eighth. Each time, we have emerged stronger, and I cannot wait to see what lies ahead in our second century.”