Bidding for Simon & Schuster Draws to a Close
The sale of Simon & Schuster appears to be nearing a suspenseful conclusion, like the final chapter of a page-turner from one of the country’s largest and most prestigious publishing houses.
Second-round bids for Simon & Schuster — which publishes boldface names like Stephen King — were due earlier this week, according to three people familiar with the negotiations, who spoke on the condition of anonymity to discuss the confidential sale process. Two of them said the remaining bidders included KKR, one of the world’s largest private-equity firms, and News Corp, the owner of HarperCollins, a competing publishing house.
The sale process is expected to conclude in the coming weeks, the people said.
A sale would put an end to years of uncertainty for Simon & Schuster, which is owned by Paramount (formerly ViacomCBS) and was initially put up for sale in early 2020.
How much suitors for Simon & Schuster were willing to pay couldn’t be determined. The last time the publisher went on the block, rival Penguin Random House agreed to pay $2.2 billion, but the Department of Justice stymied that deal.
The deal with Penguin Random House, the largest publisher in the country, was widely expected to sail through regulatory hurdles. But the Biden administration sued to stop the acquisition, arguing it would be bad for authors whose books are expected to be big sellers.
A federal judge sided with the government last fall and blocked the sale, an outcome cheered by antitrust activists and industry groups. It was a major victory for the Biden administration, which is pursuing an aggressive antitrust strategy.
Penguin Random House declared its intention to appeal the decision, but Paramount opted instead to put Simon & Schuster back up for sale. Because the deal did not go through, Penguin Random House had to pay Paramount a $200 million termination fee — a cost on top of the untold millions that it had already spent in court. Weeks after the deal fell apart, the chief executive of Penguin Random House resigned.
Simon & Schuster, one of the five largest publishing houses in the United States, remained a highly attractive company to buy. It publishes writers like Don DeLillo and Bob Woodward, along with blockbuster authors like Colleen Hoover, and has outperformed competitors even as print sales have stagnated across the industry. In the first quarter of 2023, sales rose 19 percent from a year earlier, to $258 million. Financial results at most other major houses, by comparison, were disappointing.
Selling to HarperCollins could pose a risk for Paramount. HarperCollins, like Simon & Schuster, is also one of the so-called Big Five publishers that dominate the commercial side of the business. A merger could trigger the same consolidation concerns from the government as the deal with Penguin Random House.
But while HarperCollins is the second-largest publishing company, it is much smaller than Penguin Random House, so the jump in market share would be less drastic and, perhaps, less troubling to the government.
Accepting an offer from a private equity firm like KKR could allow Paramount to avoid such regulatory challenges.
KKR has a history in the books business. In 2018, it paid about $500 million to acquire RBmedia, an audiobooks publisher. KKR said last week that it was selling RBmedia to H.I.G. Capital, a Miami-based investment firm, for $1 billion.
Publishing has seen tremendous consolidation in recent years, and many in the industry are worried about the impact of the sale of Simon & Schuster on the literary landscape.
Penguin Random House itself is the result of a 2013 merger between Penguin and Random House. After the merger, several other companies bulked up as well. Some antitrust experts predicted that the Justice Department’s success in preventing Penguin Random House from buying Simon & Schuster would put a damper on major consolidation in the industry.
Paramount has sold off many of its properties in recent years as it hones its focus on video-streaming services including Paramount+ and Pluto TV. The company has said it intends to reinvest some of the cash from selling these properties — including Simon & Schuster, the tech site CNET and the longtime CBS headquarters in Manhattan known as “Black Rock” — into its subscription streaming business, which is growing quickly but still unprofitable.
Alexandra Alter contributed reporting.
