News
Simon & Schuster Goes on the Block
Speculation swirls over who will buy the country’s third-largest trade publisher
F
rom the moment the
news broke in August that
Viacom and CBS, parent
company of Simon &
Schuster, were planning to merge, speculation began that
the new $28 billion company—which, among other assets,
owns a movie studio, television network, streaming services,
and cable networks—would look to sell S&S. That specula-
tion ended last week when ViacomCBS CEO Bob Bakish
said at a Morgan Stanley investor conference that the pub-
lishing house is not a core asset and that the company will
begin the process of selling the publishing house, which
some investors have previously expressed interest in, once
the market stabilizes.
In a March 4 letter to staff, S&S president and CEO Carolyn
Reidy broke the news about Bakish’s remarks and added
that further developments will be shared when they were
available. “Whatever the outcome, this process does not
change what we know to be true of Simon & Schuster,” she
wrote. “We are a great publishing house and one of the
world’s best known publishing brands, with an incredible
legacy and bright future. We have a tremendous track record
of producing best sellers in every category and format, and
for readers of every age. We have a history of strong and
long lasting relationships with our authors, and we will con-
tinue to bring important voices to readers around the world,
both with our current publishing and our rich backlist of
perennially favorite titles.”
With $814 million in sales in 2019, S&S is the third-largest
trade publisher in the U.S., trailing only Penguin Random
House and HarperCollins. And while those companies have
expanded over the years through acquisitions and organic
growth, S&S’s most significant acquisition since 2012 was
its 2016 purchase of Adams Media. Though S&S has
remained consistently profitable, its revenue has lagged
without a major purchase, falling for two straight years after
hitting $830 million in 2017.
Potential buyers for S&S are believed to include HC and
Hachette Book Group, which is #4 among the Big Five trade
houses, with North American sales of about $734 million in
2019 (at the current exchange rate). HBG, backed by parent
company Lagardère, has made a string of acquisitions in
recent years, including the purchase earlier in 2020 of 1,children’s titles from Disney.
In 2016, HBG made one of its
biggest purchases, acquiring the
Perseus Book Group, which had
estimated sales of between $90 million and $100 million.
HC, owned by News Corp, has made two significant acqui-
sitions since 2012: it paid $200 million that year to buy
Thomas Nelson, and in 2014 it spent C$455 million ($
at the current exchange rate) to acquire Harlequin. In fact
HC’s purchase of Harlequin is one of the few recent purchases
of a trade publisher for which both the acquisition price
and the company’s revenue is available. Historically, trade
publishers have sold for close to 1× sales. Revenue in
Harlequin’s last full year as part of Torstar was C$
million. That equates to HC paying 1.1× sales for Harlequin
and if applied to S&S’s case translates to about a $
million purchase price. Of course, a company’s growth pros-
pects and earnings also figure into the final price (Harlequin
had operating profits of C$52 million the year before it was
purchased).
While industry insiders said HC and Hachette are the
favorites to buy S&S, a mergers and acquisitions executive
noted he wouldn’t rule out a play for the publisher from a
private equity company. A foreign publisher looking for a
bigger presence in the U.S. is another possible candidate,
he added.
Should S&S be bought and merged with one of the Big
Five, resulting in the Big Four, the sale would be more proof
of consolidation in an industry that had a Big Six only eight
years ago. Amazon’s rising size as a publisher in its own
right complicates the picture somewhat as well.
Simon & Schuster was founded in 1924 by Richard L. Simon
and M. Lincoln Schuster. Its portfolio includes 17 adult
imprints, 11 children’s imprints, two audiobook imprints,
four international branches—in Australia, Canada, India,
and the U.K.—and a growing distribution business whose
clients include Andrews McMeel, Boom! Studios, Kaplan
Publishing, and Viz Media.
“This process will surely be an adventure for all of us, but
we are a company that has always risen to the challenges
we face,” Reidy wrote. “In the meantime, we will continue
to do what we do best: connecting remarkable authors to
audiences everywhere.” —Jim Milliot and John Maher4 PUBLISHERS WEEKLY ■ MARCH 9, 2020
2016 2017 2018 2019
Total $767 $830 $825 $Simon & Schuster Revenue
(in millions)SOURCE: PUBLISHERS WEEKLY