Dividends and Antitrust suit filed to stop purchase of Simon & Schuster

When a government is in power and wants to take away regulations, what that means in the corporate suite is different to what it means to individuals. Often times, the government seems to talking to the small business owner about supplying less statistics to the government. What it tends to mean for the large businesses is to buy companies to minimize competition or perform similar to a regulated utility. A case in point in the publishing business.

In an article by Tali Arbel of the Associated Press, the US Justice Department is suing to block a $2.2 billion book publishing deal that would reshape the competition.

The story is German media giant Bertelsmann Penguin Random House wants to buy Simon & Schuster. The competition is HarperCollins, Hachette Book Group and Macmillan.

The players in the story include the Authors Guild who believe less competition will lower competition for author’s manuscripts. The other book companies who may be interested in either the whole or parts of Simon & Schuster including media company News Corp which owns HarperCollins.

The industry has been consolidating because the biggest bookseller is Amazon and they can dictate prices.

The CEO of the Author’s Guild noted during the past few years, the Department of Justice has done little to block mergers and acquisitions, however under President Biden has called for greater scrutiny of mergers and the DOJ is doing that.

Linking to dividend paying stocks, all companies have to work within the environment of the government of the day, sometimes it is easier to do, sometimes is takes more time, sometimes the company needs patience until the government changes. As an investor, you want your company to make profits, as an individual you might have different views what is good for the long term.

There are more questions than answers, till the next time – to raising questions.

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