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Paramount Agrees to Sell Simon & Schuster to KKR, a Private Equity Firm


Paramount stated on Monday it had reached a deal to promote Simon & Schuster, one of many largest and most prestigious publishing homes in the US, to the private-equity agency KKR, in a significant altering of the guard within the books enterprise.

The deal, for $1.62 billion, will put management of the cultural touchstone behind authors like Stephen King and Bob Woodward within the palms of a monetary purchaser with an increasing presence within the publishing trade.

Whereas personal fairness buyers have had a big footprint within the guide enterprise — completely different companies have owned literary companies, publishing homes and the retailer Barnes & Noble — the acquisition of one of many largest publishers within the nation vastly will increase the maintain of economic pursuits within the enterprise.

Richard Sarnoff, who leads KKR’s media, leisure and expertise group, is a well-recognized identify to many within the publishing trade and his involvement is encouraging, stated a number of publishing executives on Monday. Mr. Sarnoff has held a number of positions at Bertelsmann, the corporate that owns Penguin Random Home, and served as chairman of the Affiliation of American Publishers, a commerce group.

Additionally concerned is Ted Oberwager, who’s on the board of RBMedia, an audiobook firm, and Skydance Media, which teamed up with Paramount Footage on “Prime Gun: Maverick,” a Tom Cruise motion drama that generated greater than $1 billion.

“It is a constructive,” Peter Osnos, a longtime publishing govt, stated of the deal. “An amazing publishing firm will likely be owned by individuals who will wish to respect it.”

Since Simon & Schuster was first put up on the market in 2020, many within the publishing trade have fretted over the place the corporate may land.

A sale to a different writer would imply the brand new administration would perceive the guide enterprise. However it could additionally imply additional consolidation within the trade, with doubtlessly fewer gamers out there to bid on massive books, and the possibility of layoffs as redundant jobs had been eradicated. It may additionally increase regulatory scrutiny: Paramount’s first try and promote Simon & Schuster, to Penguin Random Home was derailed by authorities antitrust issues.

Personal fairness, then again, may current completely different dangers. Some offers have come below elevated scrutiny lately for prioritizing brief time period features over the long run well being of bought companies. Personal fairness companies have a tendency to not keep possession of their acquisitions for lengthy, portending one other sale of Simon & Schuster, or else a bid to take it public.

As a part of the deal, Simon & Schuster staff will obtain an possession stake within the firm, a part of a program KKR has developed to enhance engagement amongst those that work in firms it buys. The personal fairness agency used this mannequin with RBMedia, which KKR acquired in 2018, and lately agreed to promote to a different funding agency. When RBMedia was bought, its long run staff earned a money payout from the sale price as much as two occasions their wage, KKR stated.

KKR just isn’t new to the books enterprise. Along with RBMedia, KKR has additionally invested in Overdrive, a digital studying platform utilized in libraries and colleges. A few of these bets have already paid off: KKR agreed to sell RBMedia final month at a considerable premium to its acquisition value. KKR stated that below its possession RBmedia doubled the scale of its audiobook catalog, from over 31,000 to over 66,000 audiobooks.

The highway to Monday’s announcement has been lengthy and bumpy. After Paramount (then referred to as ViacomCBS) reached an settlement to promote Simon & Schuster to Penguin Random Home, the nation’s largest guide writer, for $2.18 billion, the Biden administration challenged the sale in courtroom. A choose sided with the federal government final 12 months. Quite than attraction, Paramount determined to place Simon & Schuster again in the marketplace, obligating Penguin Random Home to pay a $200 million termination charge for its bother, on high of hundreds of thousands in authorized prices.

Although KKR’s provide for the writer is lower than what Penguin Random Home had agreed to pay, the distinction within the value is partially offset by the termination charge paid to Paramount and earnings from the writer within the intervening years. However KKR is a pretty purchaser, partly, as a result of it’s unlikely to lift purple flags with regulators.

“Paramount doesn’t wish to traipse by way of one other deal that goes bust,” stated Erik Gordon, a professor on the College of Michigan Ross Faculty of Enterprise. “It desires to promote the enterprise with out extra surprises.”

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