penguin random house simon schuster deal collapses breaking pattern in publishing

Penguin Random House-Simon & Schuster Deal Collapses, Breaking Pattern in Publishing

21prh1 facebookJumbo

Among its successes are several novels by Colleen Hoover, who has dominated the fiction best seller lists, and a surprise best-selling memoir, “I’m Glad My Mom Died,” by Jennette McCurdy, which has sold a million copies since it was published in August, the company said.

“Simon & Schuster has never been more profitable and valuable than it is today,” Jonathan Karp, the chief executive of Simon & Schuster, said in a letter to employees on Monday. “As I have noted before, we will be celebrating our 100th anniversary in April of 2024, regardless of who our owner is — and we will have much to celebrate.”

In a statement released Monday afternoon, Paramount indicated that it views Simon & Schuster as not a good fit for its broader strategy. “Simon & Schuster is a highly valuable business with a recent record of strong performance, however it is not video-based and therefore does not fit strategically within Paramount’s broader portfolio,” it said.

Until the agreement with Penguin Random House expires on Tuesday, Paramount is prohibited from discussing a sale of Simon & Schuster with other suitors. But Paramount is likely to explore a potential sale of Simon & Schuster in the new year, according to a person familiar with the matter, who said that the company will hold out for a bid that reflects its improved financial performance and who was not authorized to discuss confidential matters on the record.

The list of suitors could include companies that expressed interest in Simon & Schuster last time, including French media conglomerate Vivendi and HarperCollins owner News Corp, according to two people familiar with the matter who also were discussing confidential matters and spoke anonymously. Simon & Schuster is also likely to garner interest from financial bidders, according to an executive at a private-equity firm who spoke anonymously to discuss deal-making strategy.

It’s unclear, however, whether the headache and the legal expense of the trial could dampen the enthusiasm of other publishers. During the trial, executives for two other major publishing houses, Hachette and HarperCollins, testified that they would like their own companies to buy Simon & Schuster. It is also unclear how the Justice Department would view such an acquisition. Concerns about market share would be less pronounced — particularly for Hachette, which is significantly smaller than Penguin Random House — but the number of publishers big enough to compete on the most expensive books would still drop from five to four.

Some antitrust experts said that any deal to sell Simon & Schuster to another Big Five publisher would likely face intense scrutiny from regulators.