Los Angeles Times 11/26/2020

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A forthcoming publish-
ing deal between literary gi-
ants Simon & Schuster and
Penguin Random House is
sure to be one for the books.
On Wednesday, Viacom-
CBS announced plans to sell
Simon & Schuster to Ber-
telsmann’s Penguin Ran-
dom House for a whopping
$2.18 billion. The merger, set
to be finalized in 2021, will see
S&S continue to operate in-
dependently as part of the
Penguin Random House
publishing empire.
“In March, when Viacom-
CBS announced its plan to
sell Simon & Schuster, we
did not know that shortly
thereafter we would also be
weathering a deadly pan-
demic, displacement from
our offices, disruption in the
bookselling marketplace,
and the sudden death of our
longtime and revered CEO,
not to mention high-profile
lawsuits seeking to quash
publication of two of our
books,” Simon & Schuster
Chief Executive Jonathan
Karp wrote in a lengthy
statement, referring to un-
successful suits brought by
President Trump or his fam-
ily against two memoirs.
“Through it all, we have
persevered, adapted and in-
novated, maintained a keen
focus on our authors and our
books, and produced some
of our best results in recent
years. Now, eight months
later, I am delighted to an-
nounce that Simon &
Schuster will be joining to-

gether with Penguin Ran- dom House for the next chapter in our storied publishing history.” ViacomCBS is selling Si- mon & Schuster, whose authors include Stephen King and Doris Kearns Goodwin, at a time when it is slimming down businesses outside its core entertainment and media operations. By shedding noncore as- sets, ViacomCBS “can es- sentially reorganize their business into what they’re determining to be their fu- ture,” said C. Kerry Fields, a professor of business law and ethics at USC’s Mar- shall School of Business. “The book business repre- sents yesterday’s business opportunities.” The acquisition of Simon & Schuster by the No. 1 U.S. publisher will create a book industry supergiant — so

long as it clears antitrust hurdles. The deal could in- vite scrutiny from regulators in the incoming Biden ad- ministration, which experts believe will be harder on mergers and acquisitions than Trump’s has been. ViacomCBS said Ger- man conglomerate Bertels- mann has agreed to pay a termination fee if regulators were to block the deal but did not disclose the size of the fee. It’s the latest step in the long-term consolidation of the publishing industry, in which book houses are look- ing to gain bargaining power when dealing with online retailers such as Amazon.com. Hachette Book Group in 2016 bought Perseus Books, after the 2013 merger of Pen- guin and Random House and News Corp.’s 2014 deal for HarperCollins to buy ro-

mance novel publisher Har- lequin. Critics of such deals worry that bigger behe- moths in publishing wield increasing power over authors. Fields said he doubts the Justice Department will quash the Penguin Random House-Simon & Schuster deal. Antitrust authorities, he said, focus their attention on potential harm to consumers, rather than authors. In a dispute between the publishers and Amazon, the Justice Department sided with the latter, charging the largest publishers with col- lusion to control prices. The suit was settled in 2012-13, and the merger of Penguin and Random House soon followed. Supporters of the latest acquisition will probably be able to argue that consolida-

tion levels the playing field. “It’s true that its profile suggests a monopoly, because it’s grown so large,” Fields said of the combined company. Nonetheless, “it’s a business that is in decline, and the government may say the viability of Simon & Schuster may be better managed under the Bertels- mann umbrella.” Along with Karp, Simon & Schuster’s chief operations officer and chief finan- cial officer, Dennis Eulau will, continue to run the divi- sion under its new owner next year. In a letter to Si- mon & Schuster’s many authors, Karp emphasized that the deal would cause “no disruption” to their working relationship and that the publisher’s “creative independence” would remain intact. News of the impending purchase comes on the heels of a bidding war between media companies across the globe — including Harp- erCollins’ owner News Corp., whose CEO argued Wednes- day, “There is clearly no market logic to a bid of that size — only anti-market logic. “Bertelsmann is not just buying a book publisher, but buying market dominance as a book behemoth,” News Corp. Chief Executive Robert Thomson said in a statement. “Distributors, retailers, authors and readers would be paying for this proposed deal for a very long time to come. This literary leviathan would have 70% of the U.S. literary and general fiction market. There will certainly be legal books written about this deal, though I wonder if Bertelsmann would publish them.” News Corp. isn’t the only entity opposed to the merger. In a letter, the Open Markets Institute decided to

“call on the Justice Depart- ment to challenge this deal and to make clear that no further consolidation of power will be allowed in America’s book publishing industry, which is already too concentrated.” In a Wednesday letter to his staff, Penguin Random House Chief Executive Markus Dohle hailed Simon & Schuster’s “distinguished legacy of publishing notable authors, perennial best- sellers and culture-shaping blockbusters.” “As we have demon- strated, we can successfully unite company cultures and prestigious publishing teams while preserving each imprint’s identity and independence,” Dohle wrote. “Si- mon & Schuster aligns com- pletely with the creative and entrepreneurial culture that we nurture by providing edi- torial autonomy to our publishers, funding their pursuit of new stories, ideas, and voices, and maximizing reach for our authors.” Bertelsmann also re- leased a statement Wednes- day, calling the acquisition “another strategic mile- stone in strengthening our global content business,” which includes the Freman- tle TV production company and Bertelsmann Music Group. The media conglomerate’s pre-Thanksgiving move to gobble up Simon & Schuster comes seven years after Bertelsmann rocked the literary world by merg- ing two of the Big Six publishers: Penguin and Pear- son’s Random House. Rounding out what could soon be the Big Four are Ha- chette Livre, HarperCollins and Macmillan Publishers.

Times staff writer Meg James contributed to this report.

Simon & Schuster to be sold for $2 billion

The Penguin Random

House deal to create a

publishing industry

supergiant could face

antitrust hurdles.

By Christi Carras
and Ryan Faughnder

S&S WOULDoperate independently as part of the Penguin Random House empire, whose books include “A Promised Land, ” from Crown Publishing.

Mark LennihanAssociated Press

Those tightly packed
Black Friday lines that
snake through the mall
parking lot in the dead of
night, past tents and lawn
chairs and coolers stacked
with still-warm Thanksgiv-
ing leftovers, are not exactly
conducive to social distanc-
ing.
That puts retailers in a
difficult position ahead of a
hyped shopping day typi-
cally marked by frenzied
crowds and predawn door-
buster deals. With COVID-
cases surging across the
country and public health
officials urging Americans
to stay home as much as pos-
sible — plus a new curfew
covering 94% of Californians
— in-store shopping on the
day after Thanksgiving will
be a subdued affair.
That’s leading to some
mixed messaging from re-
tailers: Come out on Black
Friday, but not all at once.
Consider just shopping on-
line. Can’t get around to it
this weekend? No problem
— holiday discounts, which
began earlier than ever, will

continue for weeks. “The power of Black Fri- day has been diminishing over the years and now, with COVID, is virtually non- existent in stores and pri- marily moved to online,” said Marshal Cohen, chief industry analyst at market research firm NPD Group. “What COVID did was it forced what the inevitable already was to speed up.” Last year’s Black Friday pulled in record online sales of $7.4 billion, a 19.6% increase over the previous year, according to data from Adobe. If projections are ac- curate, this Black Friday will blow past that, with online sales expected to generate $10.3 billion. “We’ve rarely seen that much growth, but it’s unsur-

prising given the pandemic- driven surge to online shopping,” Adobe spokesman Kevin Fu said. With retailers hampered by temporary store closures, capacity limits and stay-at- home orders since March, many have been pointing shoppers online for months. They’ve also been spreading holiday deals out, starting as early as October and promising to keep them going well into December. Retail watchers say that despite a challenging year, there are signs that pent-up demand and “guilt gifting” will boost sales during the all-important end-of-year period. The National Retail Fed- eration on Monday forecast that November-to-Decem-

ber holiday sales, which combine in-store and online activity, would total $755. billion to $766.7 billion. That would reflect a year-over- year increase of 3.6% to 5.2%, outpacing the average holiday sales increase of 3.5% over the last five years. “There is uncertainty about consumers’ willing- ness to spend, but with the economy improving, most have the ability to spend,” Jack Kleinhenz, the retail federation’s chief economist, said in a statement. “After all they’ve been through, we think there’s going to be a psychological factor that they owe it to themselves and their families to have a better-than-normal holiday.” Hot gift categories include technology, small do- mestic appliances, house- wares, toys and do-it-your- self auto projects, which Co- hen summarized as things that help you “live a better life while you’re at home,” given that Americans will probably continue to spend a lot of their time there next year. Along those lines, ap- parel sales are expected to be weak — with the excep- tion of sleepwear and slip- pers, he said. Although the impor- tance of Black Friday has been waning for years, it was still the top shopping day in 2019, NPD Group said. How many shoppers will

venture out is impossible to predict. But consumers have been conditioned to think of Black Friday as a day to shop, and stores have been carefully preparing to welcome those who do show up — albeit with a slew of rules and restrictions. Westfield has been doing dry runs ahead of the big day, said Molly Unger, vice president of shopping center management. The company will have traffic counters at all of its 29 U.S. malls — those in Los Angeles County, such as Westfield Century City and Westfield Topanga, are currently limited to 25% capacity — and will restrict en- try at the doors or at its ga- rages, or block off parking spaces, if too many people arrive at once. “They’re ready and they’ve been practicing,” she said. “It’s not about closing

the centers down, it’s about slowing down the intake of people coming in.” In-store and curbside pickup options will help customers get in and out quickly, and Unger doesn’t expect many to leisurely browse as in years past. “We’ve seen customers’ behavior change,” she said. “It’s still a social experience to go to a mall, but they’re mission-oriented. They’re not just coming to hang out.” That will almost certainly hurt in-store sales around the country by dra- matically reducing impulse buying, Cohen said. “Black Friday won’t be as big as what we’ve seen,” he said. “There will be plenty of people who will shop, don’t get me wrong, but you won’t see that mad dash, that mass hysteria that usually occurs. That’s gone.”

Retailers prepare for a Black Friday like no other

SURGINGvirus cases led to mixed messages from retailers: Come out Black Friday, but not all at once.

Jeff ChiuAssociated Press

Rising COVID-

cases may turn the big

shopping day, usually

marked by long lines,

into a subdued affair.

By Andrea Chang

The number of Ameri-
cans applying for unemploy-
ment benefits rose last week
for a second straight week to
778,000, evidence that the
U.S. economy and job mar-
ket remain under strain as
COVID-19 cases surge and
colder weather heightens
the risks.
The Labor Department’s
report Wednesday said that
jobless claims climbed from
748,000 the previous week.
Before the virus struck hard
in mid-March, weekly claims
typically amounted to only
about 225,000. They shot up
to 6.9 million during March
before dropping, yet they re-
main historically high more
than eight months later,
with many businesses un-
able to fully reopen.
The surge in COVID-

cases is intensifying pres- sure on companies and individuals, with fear growing that the economy could suf- fer a “double-dip” recession as states and cities reimpose restrictions on businesses. The total number of people receiving traditional state unemployment benefits dropped to 6.1 million from 6.4 million the previous week. That figure has been declining for months, evidence that more Americans are finding jobs — but also because many jobless people have used up their state unemployment aid, which typically expires after six months. More Americans are collecting benefits under programs that were set up to cushion the economic pain from the pandemic. For the week of Nov. 7, the number of people collecting benefits

under the Pandemic Unem- ployment Assistance program — which offers cov- erage to gig workers and oth- ers who don’t qualify for traditional aid — rose by 466,000 to 9.1 million. And the number of people receiving aid under the Pandemic Emergency Un- employment Compensation program — which offers 13 weeks of federal benefits to those who have exhausted state jobless aid — rose by 132,000 to 4.5 million. All told, nearly 20.5 million people are receiving some type of unemployment aid. (Figures for the two pandemic-related programs aren’t adjusted for seasonal variations.) The intensifying pandemic is threatening to ac- celerate the pace of layoffs as more states and localities limit public gatherings and

mandate fewer hours and smaller capacities for restaurants, bars and other businesses. Regardless of what governments do, many Americans are likely to stay home — and away from businesses — until they feel safe again. Meanwhile, another economic threat looms: The impending expiration of the two supplemental federal unemployment programs the day after Christmas could end benefits com- pletely for 9.1 million jobless people. Congress has failed for months to agree on any new stimulus aid for jobless individuals and struggling businesses. Most economists agree that because unemployed people tend to quickly spend their benefits, such aid is ef- fective in boosting the economy.

New jobless claims rise for a second week

associated press

Los Angeles Times 11/26/2020

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