Los Angeles Times

Si­mon & Schus­ter to be sold for $2 bil­lion

The Pen­guin Ran­dom House deal to cre­ate a pub­lish­ing in­dus­try su­per­giant could face an­titrust hur­dles.

- By Christi Car­ras and Ryan Faugh­n­der Times staff writer Meg James con­trib­uted to this re­port.

A forth­com­ing pub­lish­ing deal be­tween lit­er­ary giants Si­mon & Schus­ter and Pen­guin Ran­dom House is sure to be one for the books.

On Wed­nes­day, Vi­a­comCBS an­nounced plans to sell Si­mon & Schus­ter to Ber­tels­mann’s Pen­guin Ran­dom House for a whop­ping $ 2.18 bil­lion. The merger, set to be fi­nal­ized in 2021, will see S& S con­tinue to op­er­ate in­de­pen­dently as part of the Pen­guin Ran­dom House pub­lish­ing em­pire.

“In March, when Vi­a­comCBS an­nounced its plan to sell Si­mon & Schus­ter, we did not know that shortly there­after we would also be weath­er­ing a deadly pan­demic, dis­place­ment from our of­fices, dis­rup­tion in the book­selling mar­ket­place, and the sud­den death of our long­time and revered CEO, not to men­tion high- pro­file law­suits seek­ing to quash pub­li­ca­tion of two of our books,” Si­mon & Schus­ter Chief Ex­ec­u­tive Jonathan Karp wrote in a lengthy state­ment, re­fer­ring to un­suc­cess­ful suits brought by Pres­i­dent Trump or his fam­ily against two mem­oirs.

“Through it all, we have per­se­vered, adapted and in­no­vated, main­tained a keen fo­cus on our au­thors and our books, and pro­duced some of our best re­sults in re­cent years. Now, eight months later, I am de­lighted to an­nounce that Si­mon & Schus­ter will be join­ing to­gether with Pen­guin Ran­dom House for the next chap­ter in our sto­ried pub­lish­ing his­tory.”

Vi­a­comCBS is sell­ing Si­mon & Schus­ter, whose au­thors in­clude Stephen King and Doris Kearns Good­win, at a time when it is slim­ming down busi­nesses out­side its core en­ter­tain­ment and me­dia oper­a­tions.

By shed­ding non­core as­sets, Vi­a­comCBS “can es­sen­tially re­or­ga­nize their business into what they’re de­ter­min­ing to be their fu­ture,” said C. Kerry Fields, a pro­fes­sor of business law and ethics at USC’s Mar­shall School of Business. “The book business rep­re­sents yes­ter­day’s business op­por­tu­ni­ties.”

The ac­qui­si­tion of Si­mon & Schus­ter by the No. 1 U. S. pub­lisher will cre­ate a book in­dus­try su­per­giant — so long as it clears an­titrust hur­dles. The deal could in­vite scru­tiny from reg­u­la­tors in the in­com­ing Bi­den ad­min­is­tra­tion, which ex­perts be­lieve will be harder on merg­ers and ac­qui­si­tions than Trump’s has been.

Vi­a­comCBS said Ger­man con­glom­er­ate Ber­tels­mann has agreed to pay a ter­mi­na­tion fee if reg­u­la­tors were to block the deal but did not dis­close the size of the fee.

It’s the lat­est step in the long- term con­sol­i­da­tion of the pub­lish­ing in­dus­try, in which book houses are look­ing to gain bar­gain­ing power when deal­ing with on­line re­tail­ers such as Ama­zon. com. Ha­chette Book Group in 2016 bought Perseus Books, after the 2013 merger of Pen­guin and Ran­dom House and News Corp.’ s 2014 deal for Harper-Collins to buy ro­mance novel pub­lisher Har­lequin. Crit­ics of such deals worry that big­ger be­he­moths in pub­lish­ing wield in­creas­ing power over au­thors.

Fields said he doubts the Jus­tice Depart­ment will quash the Pen­guin Ran­dom House- Si­mon & Schus­ter deal. An­titrust au­thor­i­ties, he said, fo­cus their at­ten­tion on po­ten­tial harm to con­sumers, rather than au­thors.

In a dis­pute be­tween the pub­lish­ers and Ama­zon, the Jus­tice Depart­ment sided with the lat­ter, charg­ing the largest pub­lish­ers with col­lu­sion to con­trol prices. The suit was set­tled in 2012- 13, and the merger of Pen­guin and Ran­dom House soon fol­lowed.

Sup­port­ers of the lat­est ac­qui­si­tion will prob­a­bly be able to ar­gue that con­sol­i­da­tion lev­els the play­ing field.

“It’s true that its pro­file sug­gests a mo­nop­oly, be­cause it’s grown so large,” Fields said of the com­bined com­pany. None­the­less, “it’s a business that is in de­cline, and the gov­ern­ment may say the vi­a­bil­ity of Si­mon & Schus­ter may be bet­ter man­aged un­der the Ber­tels­mann um­brella.”

Along with Karp, Si­mon & Schus­ter’s chief oper­a­tions of­fi­cer and chief fi­nan­cial of­fi­cer, Den­nis Eu­lau will, con­tinue to run the di­vi­sion un­der its new owner next year. In a let­ter to Si­mon & Schus­ter’s many au­thors, Karp em­pha­sized that the deal would cause “no dis­rup­tion” to their work­ing re­la­tion­ship and that the pub­lisher’s “cre­ative in­de­pen­dence” would re­main in­tact.

News of the im­pend­ing pur­chase comes on the heels of a bid­ding war be­tween me­dia com­pa­nies across the globe — in­clud­ing Harper-Collins’ owner News Corp., whose CEO ar­gued Wed­nes­day, “There is clearly no mar­ket logic to a bid of that size — only anti- mar­ket logic.

“Ber­tels­mann is not just buying a book pub­lisher, but buying mar­ket dom­i­nance as a book be­he­moth,” News Corp. Chief Ex­ec­u­tive Robert Thom­son said in a state­ment.

“Distrib­u­tors, re­tail­ers, au­thors and read­ers would be pay­ing for this pro­posed deal for a very long time to come. This lit­er­ary leviathan would have 70% of the U. S. lit­er­ary and gen­eral fic­tion mar­ket. There will cer­tainly be le­gal books writ­ten about this deal, though I won­der if Ber­tels­mann would pub­lish them.”

News Corp. isn’t the only en­tity op­posed to the merger. In a let­ter, the Open Mar­kets In­sti­tute de­cided to “call on the Jus­tice Depart­ment to chal­lenge this deal and to make clear that no fur­ther con­sol­i­da­tion of power will be al­lowed in Amer­ica’s book pub­lish­ing in­dus­try, which is al­ready too con­cen­trated.”

In a Wed­nes­day let­ter to his staff, Pen­guin Ran­dom House Chief Ex­ec­u­tive Markus Dohle hailed Si­mon & Schus­ter’s “dis­tin­guished legacy of pub­lish­ing no­table au­thors, peren­nial best­sellers and cul­ture- shap­ing block­busters.”

“As we have demon­strated, we can suc­cess­fully unite com­pany cul­tures and pres­ti­gious pub­lish­ing teams while pre­serv­ing each im­print’s iden­tity and in­de­pen­dence,” Dohle wrote. “Si­mon & Schus­ter aligns com­pletely with the cre­ative and en­tre­pre­neur­ial cul­ture that we nur­ture by pro­vid­ing ed­i­to­rial au­ton­omy to our pub­lish­ers, fund­ing their pur­suit of new sto­ries, ideas, and voices, and max­i­miz­ing reach for our au­thors.”

Ber­tels­mann also re­leased a state­ment Wed­nes­day, call­ing the ac­qui­si­tion “an­other strate­gic mile­stone in strength­en­ing our global con­tent business,” which in­cludes the Fre­man­tle TV pro­duc­tion com­pany and Ber­tels­mann Mu­sic Group.

The me­dia con­glom­er­ate’s pre- Thanks­giv­ing move to gob­ble up Si­mon & Schus­ter comes seven years after Ber­tels­mann rocked the lit­er­ary world by merg­ing two of the Big Six pub­lish­ers: Pen­guin and Pear­son’s Ran­dom House.

Round­ing out what could soon be the Big Four are Ha­chette Livre, Harper-Collins and Macmil­lan Pub­lish­ers.

 ?? Mark Len­ni­han As­so­ci­ated Press ?? S&S WOULD op­er­ate in­de­pen­dently as part of the Pen­guin Ran­dom House em­pire, whose books in­clude “A Promised Land, ” from Crown Pub­lish­ing.
Mark Len­ni­han As­so­ci­ated Press S&S WOULD op­er­ate in­de­pen­dently as part of the Pen­guin Ran­dom House em­pire, whose books in­clude “A Promised Land, ” from Crown Pub­lish­ing.

Newspapers in English

Newspapers from USA