Paramount Global is set to make a major announcement this Monday, as the company is reportedly close to selling its famous publisher Simon & Schuster to private equity giant KKR for a reported $1.62 billion.
According to Naveen Chopra, Chief Financial Officer at Paramount, the company is “deep into the marketing process” for the offload of the book publisher and could see a path in closing the deal this year. He further noted that it would be “a sizable transaction” that has seen “very competitive [interest] from strategic and financial buyers”.
The previous agreement to sell the Simon & Schuster to Bertelsmann’s Penguin Random House was blocked by the US regulators in 2020 on the grounds of being anti-competitive; this deal with KKR is expected not to face any such barrier.
The amount to be given by KKR to Paramount is way lesser than the latter’s original asking price, which was $2.2 billion in 2020. This decrease is likely to be due to the profitable first quarter of 2023 earnings of Simon & Schuster, with revenue up 19% to $258 million and operating profit up 16% to $58 million.
This news has major implications for the book publishing industry and has been causing a stir of concern amongst its executives who fear that this new acquisition of Simon & Schuster by a private equity firm has the potential to lead to widespread staff and editing cuts, and fewer titles for the already competitive market.
Read more: Paramount+ And Showtime Announce Merger
When the deal was still incomplete, Judge Florence Pan had noted that a smaller publication house might be able to successfully “acquire Simon & Schuster without sparking the competitive concerns of the first deal.” This deal between KKR and Paramount appears to give that opportunity.
As of now, HarperCollins and News Corp remain in the running as the third and second largest publishing companies in the country respectively. It remains to be seen what potential competition could impinge on the final deal yet to be announced by Monday.
Simon & Schuster, founded by Richard L. Simon and M. Lincoln Schuster in the 1920s, have published more than 2000 titles every year and provides an extensive library for consumers. It makes sense that so many interested parties are being drawn to what some consider to be the jewel of book publishing that so many want to take off Paramount’s hands.
An anonymous source said that “the deal has the potential to reshape book publishing,” and this is very much what Paramount is hoping for on Monday. We shall have to wait and see what comes out of this major announcement.
Source: Axios
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