Bertelsmann Buys Simon & Schuster from ViacomCBS
The hot news in the publishing world today is that one of the world’s largest media conglomerates just got a little bigger.
Bertelsmann, the parent company of Penguin Random House, is buying Simon & Schuster for just over $2 billion USD.
Bertelsmann, the international media, services, and education company, is further expanding its global content businesses with the acquisition of the publishing house Simon & Schuster. Bertelsmann’s global trade book publishing group, Penguin Random House, is purchasing the book publishing business from the media company ViacomCBS for $2.175 billion. Simon & Schuster strengthens Bertelsmann’s footprint globally, and particular in the U.S., its second-largest market. Simon & Schuster employs around 1,500 people worldwide and generated revenues of $814 million in 2019. It publishes works from well-known authors and public figures including Hillary Clinton, John Irving, Stephen King, and Bob Woodward. The transaction is subject to regulatory approvals and is expected to close during 2021. Bertelsmann will pay the purchase price in cash from existing liquid funds. Simon & Schuster will continue to be managed as a separate publishing unit under the Penguin Random House umbrella. Jonathan Karp, President & CEO of Simon & Schuster, and Dennis Eulau, COO and CFO, will continue at the helm of the publishing house.
I know that most will frame this story in terms of the Big 5 becoming the Big 4, but I don’t think that is really an accurate description.
The thing about the Big 5 is that they aren’t really that big. There are many larger or comparable-sized publishing companies, including US publishers such as Scholastic and HMH. Also, all of the remaining "Big 5" are actually part of larger international publishing conglomerates. Hachette belongs to Legardere, PRH and S&S are part of Bertelmann, Macmillan belongs to Holtzbrink, and HarperCollins belongs to Newscorp.
The Big 5 (now the Big 4) are run as parts of a larger whole, and referring to them in terms of their relative size in the US market is misleading at best.
Or at least, it is misleading to those outside the industry. If you are in the book publishing industry you’re going to notice a change in everything from reduced competition for new books to lower fees paid to service providers to the size of booth at book fairs (publisher booths have been getting smaller for years now, and this will probably accelerate the trend).
This deal is bad news for everyone except Bertelsmann’s stockholders.