NEW YORK (AP) — Simon & Schuster has been sold to the private equity firm KKR, months after a federal judge blocked its purchase by rival publisher Penguin Random House because of concerns that competition would shrink the book market. An executive for KKR is calling the deal a chance to work with “one of the most effective” book publishers.
The private equity giant will buy Simon & Schuster for $1.62 billion in cash, said Paramount Global, the parent company of the storied publishing house. Simon & Schuster will operate as a standalone entity, under the leadership of CEO Jonathan Karp.
“We are delighted,” Karp said Monday. “We will remain an independent company and not only will we continue to thrive, but with the help of KKR we can become even greater.
Paramount, which on Monday reported a loss of $424 million for the three months leading up to June 30, will use sale proceeds to pay down debt. The agreement is subject to government approval, but is unlikely to face the objections raised by the Penguin Random House deal.
Simon & Schuster, where authors include Stephen King, Colleen Hoover and Bob Woodward, is one of the so-called “Big Five” of New York publishing, with others including Penguin Random House, HarperCollins Publishers, Hachette Book Group and Macmillan. HarperCollins, owned by Rupert Murdoch’s News Corp, had expressed interest in buying Simon & Schuster.
Simon & Schuster has had strong sales over the past two years, even as the book market has cooled off. The publisher has scheduled some of the most anticipated fall releases, including Britney Spears’ memoir “The Woman In Me” and Walter Isaacson’s biography of Elon Musk.
Richard Sarnoff, chair of media at KKR, praised Simon & Schuster as effective and well run and said that it would retain editorial independence.
“We’re not going to tell them what to buy, what to publish or what not to publish,” said Sarnoff, a former executive at Penguin Random House’s parent company, the German conglomerate Bertelsmann. “There’s a 99-year legacy of editorial independence that we’re going to protect.”
Sarnoff said that no layoffs were planned, and that instead KKR hoped to invest in and expand Simon & Schuster, citing international sales as an area of possible growth. As with other companies that KKR has owned, it plans to give Simon & Schuster employees equity, an arrangement that could give the publisher a competitive advantage. In an industry where starting salaries range from $45,000-$50,000, a source of growing unhappiness among young people trying to afford living in the New York City area, an equity stake could end up being worth half or more of a worker’s annual pay, according to Sarnoff.
“The upside is big,” he said. Sarnoff added that he didn’t know how long KKR would run Simon & Schuster before selling it, although he cited five to seven years as the typical range. “We don’t have a set timeline,” he said.
Employee equity is rare in book publishing, but not unprecedented. W.W. Norton & Company, founded in 1923, has been wholly employee owned for decades.
Late in 2020, Paramount had announced the sale of Simon & Schuster to Penguin Random House for $2.2 billion, a deal that would have made the new company by far the biggest in the U.S. But the Department of Justice, which under the Biden administration has taken a tougher stance on consolidation compared to other recent presidencies, sued to block the sale in 2021.
After a three-week trial in the summer of 2022, with King among those opposing the merger, U.S. District Judge Florence Y. Pan ruled in the government’s favor, saying the DOJ had made “a compelling case that predicts substantial harm to competition.”
Paramount declined to appeal the decision, and instead renewed its efforts to sell Simon & Schuster, which next year marks its centennial. The publisher, founded in 1924 by Richard Simon and Max Schuster, has changed ownership a handful of times since being purchased by Gulf+Western in 1975. Paramount has tried for years to sell the publisher, saying it didn’t fit into the company’s emphasis on video entertainment.