Penguin Random House to buy Simon & Schuster
The biggest U.S. book publisher is about to get bigger. ViacomCBS has agreed to sell Simon & Schuster to Penguin Random House for more than $2 billion in a deal that will create the first megapublisher.
Penguin Random House, the largest book publisher in the United States, is owned by the German media conglomerate Bertelsmann. Adding Simon & Schuster, the third-largest publisher, would create a book behemoth, a combination that could trigger antitrust concerns.
The deal announced Wednesday includes provisions that would protect ViacomCBS in the event that a sale is squashed by authorities. Bertelsmann would pay what is known as a termination fee if the deal does not go through.
The sale of the company will profoundly reshape the publishing industry, increasingly a winner-take-all business in which the largest companies compete for brand-name authors and guaranteed bestsellers.
The book business has seen wave after wave of consolidation in the past decade, with the merger of Penguin and Random House in 2013, News Corp.’s purchase of romance publisher Harlequin, and Hachette Book Group’s acquisition of Perseus Books. This fall, Houghton Mifflin Harcourt announced it was exploring a sale of its trade publishing division and could be an attractive target for a large publishing company like Macmillan or Hachette.
Simon & Schuster, which publishes prominent authors like Ste
phen King, Don DeLillo, Bob Woodward, Doris Kearns Goodwin and Walter Isaacson, had long been rumored to be the next big company to be put up for sale, and it made an attractive prize for larger publishing houses seeking to grow through acquisitions. It has a backlist of more than 30,000 titles.
Founded in 1924 by Richard L. Simon and M. Lincoln Schuster, the company began as a publisher of crossword puzzles. It eventually grew into a sprawling company with more than 30 publishing units, and a backlist of literary treasures like the works of Ernest Hemingway and F. Scott Fitzgerald, Henry James and Edith Wharton.
The past year has been tumultuous for Simon & Schuster. In March, it was put up for sale, just as the first wave of the coronavirus pandemic hit, destabilizing the economy and forcing bookstores to close, hobbling a major sales channel. In May, Carolyn Reidy, the company’s beloved chief executive, died suddenly and was replaced by Jonathan Karp, who was formerly the publisher of Simon & Schuster, the company’s flagship house among dozens of imprints. The company also faced lawsuits from the Trump family and administration, as the president tried and failed to prevent the publication of books that were critical of him, by John Bolton and Mary L. Trump.
The company had a profitable year, in spite of such hurdles. Revenue grew to $649 million through September, an 8% increase, and profit before tax rose by 6% to $115 million.
For ViacomCBS, the allcash deal will help the company pay down its $21 billion debt load and keep up dividend payments to shareholders. The sale of Simon & Schuster is part of a great unwinding taking place across the media industry as conglomerates cleave off or close down ancillary businesses. ViacomCBS, which also owns Paramount studios and Nickelodeon, has bet its future on streaming, and books will not play a big role in that strategy.
Karp and Dennis Eulau, Simon & Schuster’s chief operating officer and chief financial officer, would remain the heads of the publishing house under new ownership.
In an interview Wednesday, Karp said Simon & Schuster would maintain its editorial independence and would continue to publish the same volume of books under its new ownership.
“This is a company that respects the creative autonomy of publishers,” he said. “We’ll all still be competing against each other. Publishing is a business driven by individual passions for books and for writers.”