Big Five Publisher Simon & Schuster Is for Sale

Other Big Five publishers—HarperCollins and Hachette—are among the most likely prospective buyers

As we speculated late last year, it looks like the Big Five may soon become the Big Four. Simon & Schuster’s parent company, ViacomCBS, has announced its intention to sell, saying that the publisher is not a core asset because it is not video based.

Simon & Schuster is the publisher of blockbuster authors such as Stephen King, Ursula K. Le Guin, and Judy Blume; it has about 30 unique imprints and four international branches in Australia, Canada, India, and the UK. They also distribute other publishers, including Andrews McMeel and Kaplan Publishing. Its sales in 2019 were $814 million with profits of $143 million.

According to the Wall Street Journal (subscription required), ViacomCBS is asking at least $1.2 billion for S&S and anticipates selling it to another large publisher, most likely:

• News Corp. It already owns HarperCollins, another of the Big Five; HarperCollins has acquired other publishers of size, including Thomas Nelson (2012) and Harlequin (2014). Publishing-industry analyst Thad McIlroy tells us, “[Owner Rupert] Murdoch loves growth through acquisition, so HarperCollins also resides within a culture built on growth through acquisitions.”
• Hachette (owned by Lagardère). They too have made significant acquisitions, including the recent purchase of 1,200 Disney titles.

Even though Amazon has been mentioned as a possible acquirer, most believe it’s unlikely, given the antitrust scrutiny they’re already facing.

“When you look at … the largest publishers in the world, it’s a real stretch to see any other candidate acquirers” aside from News Corp and Hachette, McIlroy says. “So that takes you next to ‘left-field’ bidders, and the question becomes, what kind of company that’s not currently primarily a trade book publisher could see S&S as a strategic acquisition?” RBMedia, owned by KKR, might be a possibility, he says, or services with longer-term financial prospects, such as Scribd, although he admits that’s a stretch.

We spoke with industry expert Mike Shatzkin about the current environment for a sale, and he says the problem for Simon & Schuster is that they will not get a premium price selling to one of their competitors. “The only way to earn money is to get someone who doesn’t want to own the books, but the apparatus,” he says. Or, put another way, he says ViacomCBS needs to find a buyer that believes owning a book-publishing company complements their business. As far as those chances, “I think they’re in for a tough go.”

Back in January, we attended a BISG workshop on publishing-industry mergers and acquisitions with David Lamb and Susan Reich from Book Advisors LLC. They reported that in 2019, Penguin Random House was the single dominant buyer in the market, and that out of all transactions, list acquisitions (usually backlist) were the most favored structure. Their high-level takeaways: book publishers—as opposed to private-equity firms or other media businesses—now predominate as buyers in the market, and they are selective and prioritize editorial fit.

Bottom line: Trade-book publishing is not a growth industry, and most foresee a future with a Big Three or even Big Two. While it’s true that traditional publishing profits are up, its sales are down in what Shatzkin calls a “well-managed” shrinkage. Unless something extraordinary happens, he says, it’s hard to make a trade publisher worth more in another year’s time.