ViacomCBS announced Wednesday morning that it has a definitive agreement to sell Simon & Schuster to Penguin Random House for $2.175 billion in cash, “from existing liquid funds.” The transaction is expected to close in 2021, with S&S ceo Jonathan Karp telling staff that will “likely” happen “in the second half of 2021 at the earliest.” It is subject to regulatory approvals — primarily in the US — and competing bidders such as HarperCollins parent News Corp. have already declared they believe “it will clearly be a serious antitrust issue.” Bertelsmann has already indicated it does not expect approval issues. (Internal PRH documents on “messaging” with industry partners about the deal acknowledges “rumors” they “will face antitrust challenges because of our size” and asserts “these are not grounded in fact and we assume may be perpetuated by competitors.”) The agreement includes a termination fee in the event the acquisition fails to win approval.
The press releases from both companies say that, “Simon & Schuster will continue to be managed as a separate publishing unit under the Penguin Random House umbrella,” with ceo Jonathan Karp and coo and cfo Dennis Eulau continuing to run the house. PRH ceo Markus Dohle confirmed in his letter to employees that “both Penguin Random House and Simon & Schuster will continue to operate their businesses independently.” A spokesperson clarifies in answer to our query that what this language means is S&S would operate similarly to other units “under our decentralized structure with independent imprints and competitive bidding which is in alignment with the entrepreneurial culture that we seek to cultivate through editorial autonomy, publishing diversity, and maximum reach.” As to some of our more granular questions about reporting lines, facilities, and the S&S distribution business, “No decisions will be made until after closing.” In line with that comment, Karp indicated to the NYT that “it was too early in the process to discuss whether there would be staff reductions or streamlining of editorial and marketing departments, or if Simon & Schuster’s print distribution networks and warehouses would be absorbed into its parent company.” Notably, the PRH spokesperson underscored, the companies “remain competitors until the closing, and maintain separate operations, as before.”
With the closing of the deal expected to take some time, Karp wrote to employees, “I understand that many of you will have questions about how this transition to new ownership will affect your work, and your benefits. I assure you that as this process unfolds we will share information with you, but understand that this will be a long process. Expect no sudden changes beyond the normal decisions we make in our regular course of business.”
He also notes, “From our first meeting with Markus Dohle and his team, it was clear that he wants to bring Simon & Schuster into the Bertelsmann family with the same thoughtful respect for our creative independence that accompanied the merger of Penguin and Random House – an integration that took years and was handled with exceptional professionalism.”
In his letter, Dohle noted, “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. We recognize—and our success has demonstrated—that collaboration makes us all stronger, and by bringing Simon & Schuster onto our global platform, we will be able to connect their authors and books with even more readers.”
The spokesperson underscored, “We think PRH and S&S are great complementary organizations and our goal with this acquisition is to grow and to provide even higher service levels for all constituents in the book ecosystem including retailers and readers.”
