Home Business Penguin Landon’s acquisition of Simon and Schuster will make the U.S. publishing industry unique
Penguin Landon's acquisition of Simon and Schuster will make the U.S. publishing industry unique

Penguin Landon’s acquisition of Simon and Schuster will make the U.S. publishing industry unique

by YCPress

Penguin Landon’s acquisition of Simon and Schuster will make the U.S. publishing industry unique

Viacom CBS has agreed to sell Simon and Schuster to Penguin Random House for more than $2 billion, the New York Times reported on November 25.

Penguin Langdon Books, America’s largest book publisher, is owned by Bertelsmann, the German media group, while the addition of Simon and Schuster, the third-largest publisher, will create a book giant, a merger that could raise antitrust concerns.

The deal announced on November 25th includes provisions that would protect Viacom if the deal is rejected by the authorities, and Bertelsmann will pay a so-called termination fee if the deal is not possible.

The sale of the company will have a profound impact on the publishing industry, which is increasingly becoming a “winner-take-all” industry. In this industry, the largest companies can compete for famous writers and bestsellers.

Simon and Schuster

Over the past decade, the book industry has experienced a wave of consolidation, including the 2013 merger of Penguin Press and Langdon Bookhouse, News Corp’s acquisition of Harlequin, the publisher of love novels, and the acquisition of Perseus Books by The Hachette Book Group. This fall, Houghton Mifflin Harcourt announced that it was considering selling its trade publishing arm, which could be a takeover target for big publishing companies such as Macmillan or Hatchette.

Simon and Schuster, which has published the work of a number of prominent authors, have been rumoured to be the next big company to be put up for sale, attractive to big publishers eager for growth through mergers and acquisitions. It has a huge collection of more than 30,000 books.

In 1924, Richard L. Simon and M. Lincoln Schuster Lincoln Schuster founded the company. Originally a publisher of crossword puzzles, it grew into a huge company with more than 30 publishing units owned by Ernest Hemingway and F. Scott Fitzgerald. Literary gems such as Scott Fitzgerald, Henry James and Edith Wharton.

The past year has been a tumultuous one for Simon and Schuster. In March, the first outbreak in the U.S. disrupted the economy, forcing bookstores to close and hampering the publishing industry’s main sales channels. Carolyn Reidy, the company’s much-loved chief executive, died in May, replaced by Jonathan Karp, a former publisher of Simon and Schuster. The company is also facing lawsuits from the Trump family and the government over the president’s attempts to block John Bolton and Mary J. Mary L. Trump published books critical of Mr. Trump, but failed.

Despite these obstacles, Simon and Schuster are still profitable this year. Revenue rose 8 percent to $649 million and pre-tax profit rose 6 percent to $115 million in the year to September.

For Viacom CBS, the owner of Simon and Schuster, the all-cash deal will help the company repay $21 billion in debt and continue to pay dividends to shareholders. The sale of Simon and Schuster is part of a massive break-up across the media industry as big business groups are spun off or shut down their ancillary businesses. Viacom CBS, which owns Paramount Studios and Nickelodeon, has put its future on streaming and books won’t play a major role in the strategy.

Under the new ownership, Mr. Karp and Mr. Simon and Mr. Schuster’s chief operating officer and chief financial officer, Dennis Eulau, will continue to head the publishing house.

In an interview on November 25th, Mr Karp told the New York Times that Mr Simon and Mr Schuster would remain editorially independent and that the number of books published would remain the same under the new owner.

“This is a company that respects the creative autonomy of publishers.” “We’re still competing with each other,” he said. Publishing is a business driven by an individual’s passion for books and writers. “

Mr. Karp said it was too early to discuss whether to cut jobs or streamline editorial and marketing departments, or to include Simon and Schuster’s print distribution network and warehouse with its parent company.

Markus Dohle, chief executive of Penguin Langdon Books and a Bertelsmann executive board member, said in an interview that Simon and Schuster would retain their editors. He points out that Penguin Landon Bookhouse’s printing companies compete with each other on book projects, as will Simon and Schuster.

“We’ve done this before, so we have a concept about it.” Citing the merger of Langdon Bookhouse and Penguin, he said, “we basically kept the creative side of the business undisturbed.” “

Mr. Doyle said concerns that his company’s acquisition of Simon Schuster would create a monopoly that would curb competition were based on “politics and feelings” rather than data.

“Compared to other industries, the book publishing industry is rather unsysothy and loose.” He said. “We are very confident that the deal will be approved and that we will improve the service levels of writers, agents and retailers.”

Still, some writers and literary groups are wary of news that the biggest publishing company could gain a bigger share of the market.

“I’m worried that this will force writers out of the industry and very good people who work in the industry.” Jason Pinter, founder and publisher of Polis Books, an independent publishing company, said.

The Writers Guild of America said in a statement that it opposed the deal and called on the Justice Department to challenge it. “The number of large mainstream publishers will be reduced from five to four, further reducing competition in an already scarce competitive environment. For writers, this means that there will be fewer bidders for their manuscripts, which will inevitably reduce advances. “

Viacom CBS has received inquiries from six buyers, including some financial firms and French media giant Vivendi. Vichy owns a minority stake in Archer through publisher Lagardere. The top three contenders are Bertelsmann, Rupert Murdoch’s HarperCollins-owned News Corp and Vivandi. The Financial Times earlier reported that Bertelsmann was close to a deal.

According to Erik Gordon, a professor at the University of Michigan’s Ross School of Business, Biden’s team, which has just been elected president, will review the merger. The new administration, he said, “will be tougher than the previous administration’s team and more sympathetic to the plight of writers who are unable to negotiate agreements or even publish their work.” “

He added that regulators might seek so-called “structural remedies” and that Penguin Landon Would have to sell other divisions or printed materials as part of the merger. He said the company would have to divest or sell a large enough share to create “viable competitors”.

A Bertelsmann spokesman said Penguin Landon Bookhouse’s market share had declined in recent years and noted that Amazon posed a competitive threat to the entire book market. Citing data from the Publishers Association of America, an industry group, the company said the merger of Penguin Landon and Simon and Schuster would be “less than 20 per cent”.

The deal could also have a knock-on effect on the entire literary ecosystem. Large publishers are better able to negotiate offers with major retailers such as Amazon, Barnes and Noble, and develop direct-to-consumer marketing and sales networks so they are less dependent on retailers.

Some industry analysts say the sale will accelerate the long-term trend of the past decade as publishers rely more and more on best-selling and re-print sales and fewer opportunities for new and non-focused new book writers.

“For some books, the number of potential customers has been reduced from five to four.” “This is another sign of a weakening of the publishing ecosystem,” said Mike Shatzkin, founder and chief executive of Idea Logic. “

Penguin Langdon Bookhouse’s upcoming acquisition of Simon and Schuster dwarfs other big publishing companies, which are expected to account for 30 per cent of the US book market.

“It’s definitely expanding its dominance, and it’s going to be a panacea for strength.” Shatskin said.