Paramount is preparing to announce an agreement to sell Simon & Schuster, one of the top publishers in the United States, to KKR, a private-equity firm. This marks the end of a long attempt to sell the publishing house. The deal, valued at approximately $1.62 billion, could be announced as soon as Monday, according to anonymous sources familiar with the deal. However, it is important to note that the deal is not yet final and could still fall apart.
The potential sale of Simon & Schuster has the potential to reshape the book publishing industry, as the company is a significant player in the field. This announcement may provide closure for employees and industry observers who have anxiously awaited a new owner for the publishing house.
Paramount (formerly ViacomCBS) initially put Simon & Schuster up for sale in 2020. Nine months later, they announced a deal to sell the company to Penguin Random House for $2.18 billion. However, the Biden administration challenged the merger on antitrust grounds, citing concerns about the impact on authors. A judge ruled in favor of the government and blocked the merger, resulting in Penguin Random House having to pay Paramount a $200 million termination fee.
The possibility of a private equity firm, such as KKR, purchasing Simon & Schuster has made some publishing executives nervous over the past few years. They are concerned that such a deal could lead to staff cuts and a reduction in the number of book titles published. However, private equity firms have been involved in the book industry before, with examples like KKR’s acquisition of OverDrive, a digital reading platform, in 2020.
HarperCollins, which is owned by News Corp. and is the second-largest publisher in the country, was also a contender in the bidding process for Simon & Schuster. However, if Paramount had struck a deal with another large publisher, it could have faced regulatory challenges once again. Despite its size, the combination of HarperCollins and Simon & Schuster would still be smaller than Penguin Random House, which holds the largest share of the market for print books in the United States.
While KKR is paying less than what Penguin Random House had agreed to pay, the difference is offset by the cash generated by Simon & Schuster in the last two years and the termination fee paid to Paramount. Simon & Schuster, which will celebrate its 100th anniversary next year, was founded as a publisher of crossword puzzles. Today, it publishes over 2,000 titles annually and has seen success with books like “Too Much and Never Enough” by Mary L. Trump and “It Ends With Us” by Colleen Hoover.
Despite the previous failed deal, Simon & Schuster has continued to perform well. In the first quarter of 2023, its sales rose to $258 million, a 19 percent increase compared to the previous year. This is in contrast to disappointing results at other major publishers during the same period. This new agreement with KKR may provide a stable future for Simon & Schuster, ensuring its continued success in the publishing industry.