Unlike Wednesday, the final day of the Department of Justice’s anti-trust trial against Penguin Random House offered no fireworks Thursday, with the two sides largely attacking each other’s calculations, data, and modelling, such as the employment of the Gross Upward Pricing Pressure Index (GUPPI).
PRH expert witness Edward Snyder returned to the stand where he continued to be cross-examined by the DOJ’s attorney, with the line of questioning returning to his methodology for calculating the percentage of times PRH or Simon & Schuster has won high-dollar auctions for books, as well as a variety of hypothetical, yet similar situations. Later in the day, the government’s economist, Nicholas Hill, returned to the witness stand to rebut several of Synder’s assertions.
One major topic of debate was how, post-merger, PRH and S&S imprints will compete. Snyder maintains that after the merger, PRH and S&S imprints will continue to compete – imprint competition, he called it – and it will provide a level of competition to sustain or even raise advances. One calculation developed by PRH predicted a 10% rise in advances, and PRH global CEO Markus Dohle has said he was considering ending caps on advances to make the company even more competitive.
During Snyder’s Thursday testimony, Judge Florence Pan challenged Snyder over his imprint competition analysis, asking him if PRH US CEO Madeline McIntosh had not said, earlier in the trial, that she wants to curtail imprints bidding against each other and that PRH has appointed an employee to monitor bids. “There is testimony to that effect. There are emails from different editors saying ‘let’s go up this amount or let’s all bid the same amount'-- that doesn’t affect your analysis?,” asked Pan.
The question of bid coordination has been raised several times during the trial. Specifically, McIntosh was questioned if she was personally involved in coordinating bids from different PRH divisions at auctions. McIntosh answered, “Occasionally it has happened, yes.” It was then noted that when she was not available, Nina von Moltke was given responsibility for that role. McIntosh pointed out that she wanted information shared across divisions that will help PRH win books.
Addressing bid coordination in the DOJ’s rebuttal of Snyder, Hill asserted he had seen examples of possible bid coordination, citing the bidding on a nonfiction book that showed bids from several PRH imprints all offering exactly the same advance and terms. (It should be noted that publishers often employ standardized contracts across all divisions.) The DOJ and Hill have contended that the overall sum of money spent on an individual anticipated top-selling title post merger would likely drop by $100,000-$150,000 from current levels as a result of reduced competition.
Hill said he favored publisher competition, not imprint competition, which he feels is not as robust, or even feasible in lifting advances. In his analysis of the deal data supplied by agents and surveyed by Snyder, shifting the focal point of discussion off the $250,000 figure, revealed that 75% of the non-Big Five publishers had never won a contract over $175,000, “and only one had won a contract valued over $225,000,” Hill said.
Hill also questioned Snyder’s figures about total market share in which he asserted 13 publishers he had reviewed had seen significant enough growth between 2019-2021, making them more competitive with the Big Five. Hill said that based on his analysis, only two publishers had “sustained growth.” The difference was that Snyder had left out PRH’s share of the market in his calculations.
In summary, Hill said that non-Big Five publishers “see significant barriers to expansion and haven't significantly changed their market share."
Closing arguments take place today. One intriguing note is that Simon & Schuster’s attorney, citing "different business interests" than PRH, requested 45 minutes to make his own closing remarks.
