NEW YORK — After a federal judge rejected the acquisition of Simon & Schuster by rival publisher Penguin Random House due to worries that competition would lead the book industry to contract, Simon & Schuster has now been sold to the private equity firm KKR. A KKR executive describes the deal as an opportunity to collaborate with “one of the most effective” book publishers.
According to Paramount Global, the parent company of the illustrious publishing business, the private equity goliath will purchase Simon & Schuster for $1.62 billion in cash. Simon & Schuster will function independently, with CEO Jonathan Karp in charge.
We are happy, Karp stated on Monday. “We will continue to be a stand-alone business; with KKR’s assistance, we may grow even more successful.
Paramount will use the money from the sale to reduce debt. The studio announced a $424 million deficit for the three months ending on June 30 on Monday. Government clearance of the agreement is required, but it is unlikely to encounter the same challenges the Penguin Random House deal had.
One of the “Big Five” of New York publishing houses is Simon & Schuster, which publishes writers including Stephen King, Colleen Hoover, and Bob Woodward. The other four are Penguin Random House, HarperCollins Publishers, Hachette Book Group, and Macmillan. Rupert Murdoch’s News Corp.-owned HarperCollins had previously expressed interest in acquiring Simon & Schuster.
After a federal judge rejected the acquisition of Simon & Schuster by rival publisher Penguin Random House due to worries that competition would lead the book industry to contract.
Even if the book market has slowed down over the previous two years, Simon & Schuster has had good sales. The publisher has scheduled some of the most eagerly awaited autumn publications, including Britney Spears’ autobiography “The Woman In Me” and Walter Isaacson’s biography of Elon Musk.
Simon & Schuster was commended as efficient and well-run by Richard Sarnoff, chair of media at KKR, who also stated that it would maintain its editorial freedom.
A former official at Bertelsmann, the parent firm of Penguin Random House, said, “We’re not going to tell them what to buy, what to publish, or what not to publish.” We will uphold the editorial freedom that has existed for 99 years.
No layoffs were anticipated, according to Sarnoff, and KKR intended to invest in and promote Simon & Schuster instead, noting potential growth in overseas sales. Like other KKR-owned businesses, Simon & Schuster will offer its staff ownership, which might give the publisher a competitive edge. According to Sarnoff, an ownership interest might wind up being worth half or more of a worker’s annual salary in an industry where starting salaries are typically between $45,000 and $50,000, a source of growing discontent among young people trying to afford to live in the New York City region.
After a federal judge rejected the acquisition of Simon & Schuster by rival publisher Penguin Random House due to worries that competition would lead the book industry to contract.
“There’s a lot of upside,” he remarked. Sarnoff continued, “I don’t know how long KKR will run Simon & Schuster before selling it,” citing a normal range of five to seven years. He stated, “We don’t have a specific schedule.
Employee equity is uncommon but not unheard of in the book publishing industry. Since its inception in 1923, W.W. Norton & Company has been entirely owned by its employees.
Simon & Schuster was set to be sold by Paramount to Penguin Random House for $2.2 billion late in 2020, making the new business the biggest in the country. However, the Department of Justice, which has adopted a more strict consolidation policy under the Biden administration than other recent administrations, filed a lawsuit in 2021 to prevent the transaction.
King was one of the parties opposed to the merger during the three-week trial in the summer of 2022. However, U.S. District Judge Florence Y. Pan decided in the government’s favor, stating that the DOJ had presented “a compelling case that predicts substantial harm to competition.”
Instead of appealing the ruling, Paramount decided to step up its attempts to sell Simon & Schuster, which would celebrate its 100th anniversary the following year. Since being acquired by Gulf+Western in 1975, the publisher, founded in 1924 by Richard Simon and Max Schuster, has undergone several ownership changes. Since the publisher didn’t mesh with the company’s emphasis on video entertainment, Paramount has tried for years to sell it.
SOURCE – (AP)
