Amazon in Talks with Simon & Schuster – Acquisition?

amazon simon schuster purchase logoThe publishing world was thrown into a tizzy Tuesday night with the news of new negotiations between Amazon and S&S. Few details are known at this time, and all we really know is what the WSJ has reported:

Hachette isn’t the only book publisher facing down Amazon.

The country’s largest bookseller is also in talks with Simon & Schuster, said Leslie Moonves, CEO of the publisher’s parent CBS Corp. at the Fortune Brainstorm Tech conference in Aspen, Colo. Moonves added that he’d personally met with Amazon CEO Jeff Bezos at a recent conference in Sun Valley, Idaho.

“Amazon has a definite point of view about what should be done in the publishing business,” said Moonves. “It’s going to be a very interesting thing to watch.”

It wasn’t immediately clear what the nature of Amazon’s talks with Simon & Schuster are, and a spokesman for the book publisher declined to comment. An Amazon spokeswoman didn’t respond to a request for comment.

No one yet knows why Amazon is in talks with Simon & Schuster, but as DBW pointed out Amazon isn't pulling any dirty tricks with S&S print titles. The responsible thing would be to wait for leaks from S&S which add details to the story.

In the meantime, let me float an idea past you: Could this be a deal for Amazon to buy S&S?

That is a crazy idea, yes, but hear me out. Before you send for the trank guns, just remember that in the past 6 months I accurately called the Dropbox-Readmill deal, the Comixology acquisition, and the Nook Media spin off.

And now I wonder if Amazon is going to buy S&S.

One thing I've never shared is that in the back of my mind I keep a list of countries companies Amazon might want to buy. S&S is on that list under the heading major trade publisher.

To put it simply, Simon & Schuster is the smallest of the Big 5, and there's no real connection between it and its parent company -  not like there is for the 4 other major US trade publishers.

With $800 million in revenue in 2013, S&S is the smallest of the major US trade publishers (in terms of revenue). It is a wholly owned sub of CBS, a $15 billion a year company with operations mainly in the US.

Assuming Amazon were in the market to buy a major trade publisher, S&S would be the easiest target. It's smaller than HarperCollins and it's not owned by or part of a multinational publishing conglomerate (unlike PRH, Macmillian, and Hachette).

Of course, we don't know Amazon is in the market to buy a major trade publisher so this is purely speculative. This could just be a contract negotiation for book and ebook distribution, and if that is the case someone will leak something.

Until we know more, I plan to hold this as a possibility and not a probability.

About Nate Hoffelder (11466 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader: "I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

23 Comments on Amazon in Talks with Simon & Schuster – Acquisition?

  1. See? That is how serious businesses behave.
    “No comment” up the wazoo until something is settled.

    Now, if we’re going to speculate, the first and most likely possibility is that S&S is next up to negotiate their contract with Amazon and, rather than stonewall, they are actually (gasp) negotiating before the thing expires. S&S went through hell getting a deal with B&N last year and they already see Amazon going to the mattresses with Hachette so they know how *not* to do it.

    Sale/merger? Quite possible.
    S&S has never delivered the magical synergies CBS was looking for so a sale has been an option for a few years. The kind of deal I could see going down is Amazon paying a few hundred million to merge S&S with Amazon publishing (and maybe CreateSpace, and Audible) and spinning it off as a co-owned subsidiary with CBS as a minority partner. The combination would be bigger than Hachette and possibly Macmillan and it would give Amazon Publishing a respectable backlist catalog. And putting some distance between Amazon the retailer and Amazon the (mid-size) publisher would be politically helpful down the road.

    • I’ve never really understood what a tv network would want with a book publisher. I don’t see the synergy, and that is part of the reason why I think CBS would part with S&S.

      I like the idea of a co-owned sub, though. That almost makes more sense than an outright purchase.

    • It’s good to see that Simon and Schuster is negotiating before the contract expires. Amazon already has a good relationship with CBS with its renewal of the contract for Under the Dome as well as Extant. Jobs went directly to Murdoch when there were problems commuting to agreement with HarperCollins. What if Bezos is trying something similar with Moonves and talking bottom line. He has plenty of data on sales including the ability to show how sales went down for the Big Four when they went agency while Random House increased when it didn’t. Imagine if he could drive a chunk in y Cabal with Simon and Schuster agreeing to terms with promotional sweeteners from Amazon. Moonves is not part of publishing tradition and may see the benefit of some of Amazon’s ideas.

  2. CBS is controlled by National Amusements so they would have to agree to any sale of S&S.

  3. I like idle speculation as much as the next fellow. What s missing here is Amazon’s motivation. What are the pros and cons of Amazon acquiring Simon? I’d say the pros are modest and the major cons are two-fold: (1) Very bad PR at a time when Amazon is handling the dust-up over Hachette (and a generally anti-Amazon feeling in Europe); and (2) A shit-storm of negativitiy among publishers, putting even more of freon chill on Amazon/publisher negotiations over terms. That said, I think such major publishing acquisitions are nearly inevitable–but the timing stinks right now.

    • Oh, the timing is perfect.
      S&S is looking at big losses on the Clinton book and a protracted fight with Amazon over agency means more losses. And with Hachette having triggered a class war in Publishing the climate isn’t going to get any better.

      For Amazon, a merge-and-spin gets them (nominally) out of the publishing side of the business and breaks the cartel. And it leaves Hachette alone without a contract at least until next march when the next contract expires. (HC or Macmillan.) It also takes S&S off the market, reducing the merger options for the three most recalcitrant conspirators.

      What really makes the deal unlikely is that people have been expecting CBS to sell S&S for years and they haven’t given any signs of actually pulling the trigger.

    • I don’t understand it either, but then why did Amazon get into publishing in the first place?

      • Opportunism.
        There is money to be made if you run a tight ship.
        All the evidence is that Amazon Publishing is profitable, boycott or not, just off ebook sales alone.

  4. I don’t think it sounds so crazy. Amazon has been expanding it’s own publishing imprints and author exclusive services. There’s all kinds of programs from Kindle Worlds to Serials to Singles. All of those need more editorial oversight and continual care than I think the’re currently equipped with.

    Why hire and train a whole new division when you can just buy one that’s already rolling?

  5. Why are there still no posters suffering from Amazon Derangement Syndrome? Surely they must try to refute this by saying that Amazon runs at a loss and cannot have any money to pay for this.

    The reality that Amazon does make truck loads of money but re-invests it just as quickly is something that they have not worked out yet. This investment would be interesting if it did go ahead

  6. If Amazon does buy Simon & Schuster, I wonder if Barnes & Noble and the independent bookstores would suddenly stop carrying Simon & Schuster books?

  7. I think the negotations may have to do with amazon’s new unlimited reading program. I noticed a lot of Simon & Schuster books when I was browsing the selection.

  8. First of all, can they do it? Can they buy the publisher and not get broken by FTC?
    Second, even if they don’t want to or can buy it, maybe it’s just a stick to bring Hachette in line? After all, these are just “talks”, priming S&S for sale and giving Amazon some bargaining power. Everyone wins.

    • If Penguin Random House passes muster then I don’t see how Amazon & Schuster would fail. PRH is huge, while Amazon’s new publishing division would still be much smaller.

    • Yup. Easily.
      Amazon Publishing only publishes a couple hundred titles a year and most of its backlist was bought from dead publishers.

  9. The only safe bet here is that any S&S authors who were reading the BS from Konrath, Howey and Eisler over Hachette are going to be sorely disappointed when they find out that Amazon won’t be paying them 70% royalties, any more than it pays its own imprint authors 70% royalties.

    • That is the tricky point in the assumption that Amazon would buy a top 5 publisher.

      The mantra coming out of late by Amazon published authors is:

      “At Amazon, we pay our Authors better than any of the Big 5 publishers”

      If Amazon does buy S&S, does Amazon keep all contracts with their ‘ S&S purchased authors’ as they are or do they offer each author similar contracts that people like Barry Eisler get?

      Would B&N still refuse to stock any Amazon published books? Is that illegal?

      If Amazon does offer superior terms, then the other publishers are going to look very foolish. The overheads of the Big5 are huge and their inertia is to do nothing new.

      This potential purchase by Amazon could be very costly if they keep all S&S’s staff and all their offices. Some trimming may be required to prove (again) that they sell books to make money.

      From my perspective, it would probably bring some healthy competition in the acquiring of authors to the biggest publishers.

      I know that at this stage it is only Nate’s gut feeling that this is what they are negotiating, but if it was true, it could be a brand new phase in the way books are published. Very exciting!!!

      • Actually, when Amazon bought Avalon they offered the authors the choice of a new Amazon contract. Most accepted.

    • Of course, none of those three have said that the royalty split with an Amazon imprint is equal to the KDP split.

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