It's censorship when a government does it. Seriously, that's what it comes down to, and I agree with him, although I think there's one way in which what Random House is doing could be considered censorship--but that's based on supposition.
Here's the rest of the story. Random House agreed to publish a novel--a first novel by writer Sherry Jones--that was about Muhammad's child bride. Later, after the book was printed and ready to be released, Random House got cold feet and decided to not release it. Salman Rushdie, in an email to the AP, called it censorship, and Fish got a little het up about that word.
Near the end of his column, Fish says "So what Random House did was not censorship. (Some other press is perfectly free to publish Jones’s book, and one probably will.)" But that claim seems to be based on incomplete information. Has Random House tossed the book back into the marketplace or are they holding onto the rights? If they've released it, then Fish's statement is accurate--Random House is not guilty of censorship. But if they've bought the rights to a book and now have the intent of refusing to allow anyone to publish it, can't we at least argue that they're engaging in a form of censorship? Were this the case--and I want to make clear that I don't know if it is or not--a powerful entity would be exercising its power to keep information from the public.
It's not a perfect comparison, and I'm certainly in agreement with Fish's opinion that the word "censorship" gets thrown around carelessly by people who ought to know better. But I can certainly see why people would use the word in some very particular circumstances.