- Jobs will be lost. This was the demonstrable result of the previous merger of Penguin and Random House, as discussed last week. It is reasonable to expect half the current Simon & Schuster Canada payroll to disappear within a few years of the deal’s consummation.
- Canada will be down to two big publishers: HarperCollins and the combined PRHC+S&SC. (The US will still have a big four, including Macmillan and Hachette). PRHC+S&SC indeed will be a monster with “greater ability to demand even better terms of trade with retailers and suppliers,” to say nothing of shaping Canada’s literary culture.
- The deal subverts the government’s stated policy of fostering a competitive, Canadian-owned publishing sector operated primarily to the benefit of Canadians.
It’s shocking to me how little attention the proposed merger of Penguin Random House and Simon & Schuster is getting from Canadian media. Neither the business nor the arts desks seem interested. Maybe it’s a lack of reporting resources, which these days is usually the culprit in uncovered stories, or maybe it’s a lack of insight into what we’d be left with if the Canadian branches of those firms combine. The Association of Canadian Publishers (ACP), representing the little guys in our book publishing field (Sutherland House is not a member), took a stab at defining the issue last week not long after the $2 billion (USD) sale was announced: the merger of Penguin Random House and Simon & Schuster would create a monster in Canada, hampering the efforts of Canadian-owned publishers to compete in their own market. Said ACP executive director Kate Edwards, “Canadian authors will have fewer houses to present their manuscripts to, jobs will inevitably be lost as operations are combined, and S&S/PRH will have greater ability to demand even better terms of trade with retailers and suppliers. A culture of ‘blockbuster’ publishing will become more entrenched. All of this will increase pressure on independent presses who already struggle to compete in a concentrated market dominated by large global companies.” The ACP dragged out the Revised Foreign Investment Policy on Book Publishing, Retail and Distribution (1992) which supposedly requires the minister of the Department of Canadian Heritage to review indirect foreign acquisitions resulting from larger international transactions to ensure they provide net benefits to Canada and a supposedly Canadian-controlled book sector. As a practical matter, our federal government has ignored this policy and winked at previous mergers and acquisitions (like the one that combined Penguin and Random House in the first place). The ACP also wonders if the deal doesn’t violate the Competition Act by severely diminishing competition in the Canadian book market. All due respect to the ACP, some of its arguments are red herrings. Simon & Schuster Canada (S&SC) wasn’t publishing a lot of books in Canada (as opposed to distributing its American parent’s titles here) and it will likely continue to publish roughly the same number as part of Penguin Random House Canada (PRHC). As we discussed last week in our larger review of the proposed merger, The blockbuster mentality of the big houses already pertains to both S&SC and PRHC; it won’t be much different when they merge. Nor will the ability of independent Canadian publishers to compete with global players be seriously affected. One could argue their ability to compete might be enhanced if the combination of PRHC and S&SC results in the big guys competing less with each other and paying lower advances for books in Canada. The legitimate points are three: