Wednesday began with Judge Florence Pan excluding the testimony from Manuel Sansigre, senior v-p and global head of mergers and acquisitions for Penguin Random House. It was a decision that some observers said appeared pre-determined, considering the judge read her ruling from a multi-paged prepared document that referenced numerous precedents for the decision.
Following the announcement, the defense again recalled Edward Snyder to the stand, where he elaborated further on this methodology of analyzing nearly 1,000 business deals shared with him by literary agents. At one point, Snyder called publishing an “opaque industry” and it was not always clear exactly why, how, or even when books were acquired. “But eventually, the winner is always known.”
The DOJ has framed its case around the argument that authors whose books earned an advance of $250,000 or more—a category that has been dubbed “anticipated top sellers”—would be particularly impacted by the merger and much of the debate in recent days has centered on this issue. Snyder noted again that there were more than 15 publishers bidding on books that were valued at $250,000 or more, each of which represented potential competitors for a merged PRR/S&S. He noted a number of times that the $250,000 threshold was an artificial market, pointing out at one point that those most likely to be impacted by consolidation were authors whose contracts were around $50,000.
During the DOJ’s cross-examination, the prosecution asked Snyder to reflect on specific publishers he cited in his report to the court and whether they posed a competitive threat to the Big Five. Norton, which Snyder referenced numerous times, was raised and it was noted the publisher produced 150-200 new titles a year and was employee owned. Amazon Publishing, Chronicle Books, Astra House and Spiegel and Grau were all also raised by the DOJ attorney, who questioned Snyder about their ability to consistently compete with the Big Five.
Snyder was also confronted several times with hypothetical situations where 90% of the industry was dominated by one company, leaving the other 10% as the sole “constraint” on the dominant firm. “Would that be considered competitive?,” Judge Pan asked. At another point, the DOJ’s attorney asked, "If you only had two bidders for a book, would that be considered a competitive environment, or is it better to have three?" Snyder replied, “That is a question out of the 1960s. It’s simply a numbers game.”
At various points Snyder and the government attorney appeared to become exasperated with each other. Towards the end of the day, the DOJ attorney challenged Snyder—who has ascribed a great deal of influence to agents—on his assertion that agents were able to foster multiple competitive bids from publishers.
DOJ attorney: “Beyond having a gun, agents cannot force a publisher to bid?”
Snyder: “Agents don’t have guns, they have tactics.”
Snyder will finish his testimony on Thursday and will be the defense’s final witness. Closing arguments are expected to be presented on Friday.