NEW YORK — The publisher Simón & Schuster was sold to the private equity firm KKR, months after a federal judge blocked its purchase by rival publisher Penguin Random House amid fears of affecting competition in the publishing industry. A KKR executive called the deal an opportunity to work with “one of the most effective publishers.”
The private equity giant will buy the editorial Simon & Schuster for $1.62 billion in cash, said Paramount Global, the parent company of the landmark publisher. Simon & Schuster will operate as an independent entity, under the leadership of CEO Jonathan Karp.
“We are delighted,” Karp said Monday. “We will remain an independent company and not only will we continue to prosper, but with the help of KKR we can become even bigger.”
Paramount, which on Monday reported a loss of $424 million for the quarter to June 30, will use the proceeds from the sale to pay down debt. The deal is subject to government approval, but is unlikely to face the objections raised with Penguin Random House’s offer.
Simon & Schuster, whose authors include Stephen King, Colleen Hoover and Bob Woodward, is one of the so-called “big five” publishers in New York, along with Penguin Random House, HarperCollins Publishers, Hachette Book Group and Macmillan. HarperCollins, owned by Rupert Murdoch’s News Corp, had expressed interest in buying Simon & Schuster.
Simon & Schuster has had solid sales over the past two years, even as the book market has cooled. The publisher has some of the most highly anticipated year-end releases planned, including the Britney Spears memoir “The Woman In Me” and Walter Isaacson’s biography of Elon Musk.
Richard Sarnoff, KKR’s president of media, praised Simon & Schuster as effective and well run and said it would maintain editorial independence.
“We’re not going to tell you what to buy, what to publish or what not to publish,” said Sarnoff, who was an executive at Penguin Random House’s parent company, the German conglomerate Bertelsmann. “There is a 99-year legacy of editorial independence that we are going to protect.”
Sarnoff said no layoffs are planned and instead KKR hoped to invest in and expand Simon & Schuster, citing international sales as an area of possible growth. As with other companies owned by KKR, the conglomerate plans to give Simon & Schuster employees shares, an arrangement that could give the publisher a competitive advantage. In an industry where starting salaries range from $45,000 to $50,000, which can be unappealing to young people trying to live in the New York City area, a stock stake could be worth half or more of the annual salary of a worker, according to Sarnoff.
“The upside is big,” Sarnoff said, adding that he didn’t know how long KKR would run Simon & Schuster before selling it, though he cited five to seven years as a typical range. “We don’t have a set schedule,” he said.
Employee ownership is rare in the publishing industry, but not unprecedented. WW Norton & Company, founded in 1923, has been wholly owned by employees for decades.
In late 2020, Paramount had announced the sale of Simon & Schuster to Penguin Random House for $2.2 billion, a deal that would have made the new company the largest publisher in the United States, but the Justice Department, which under The Biden administration has adopted a stricter stance for the consolidation of companies and the fight against possible monopolies, compared to other recent presidencies, it demanded to block the sale in 2021.
After a three-week trial in mid-2022, with King among those opposing the merger, U.S. District Judge Florence Y. Pan ruled in favor of the government, saying the Justice Department had made “a compelling case that predicts substantial harm to competition.
Paramount refused to appeal the decision, instead renewing its efforts to sell Simon & Schuster, which celebrates its 100th anniversary next year. The publisher, founded in 1924 by Richard Simon and Max Schuster, has changed ownership several times since Gulf+Western bought it in 1975. Paramount had tried to sell the publisher for years, arguing that it did not fit the company’s emphasis on video entertainment.
FOUNTAIN: With information from AFP
