A PYMNTS Company

American Publishing House Simon & Schuster Acquired by Global Private Equity Firm KKR

 |  August 8, 2023

On Monday, the largest and most iconic American publishing house, Simon & Schuster, was acquired by global private equity firm KKR in a $1.62 billion deal, signaling a potential major shift in the business of bookmaking.

The acquisition has been met with both celebration and trepidation, as literary and cultural figures lament the potential sale of the touchstone publishing house to a financial buyer whose primary focus may not lie in protecting the integrity of the works it publishes.

Jim Milliot, Editorial Director of Publishers Weekly, expressed cautious optimism, stating: “I think it’s generally good news for people at Simon & Schuster…No doubt there will be changes, but KKR is a respected investor in the media space, and Richard Sarnoff knows the industry well.”

Paramount Global, which is owned by Simon & Schuster, had previously attempted to sell the 99-year-old institution to Penguin Random House in 2020, but the deal was struck down by the Justice Department who viewed the consolidation of power as an antitrust issue.

When the KKR deal is finalized, Simon & Schuster will become its own stand-alone company. As a part of the purchase, KKR will invest in all areas necessary to establish and develop Simon & Schuster, including increasing the company’s presence in domestic and international markets. In addition, employees of the publishing house will receive an ownership stake in the company thanks to a program developed by KKR to increase engagement and participation.

Richard Sarnoff, adviser to KKR on its media deals, is a familiar name to many in the publishing industry, and believes that “by investing in the expansion of the company’s capabilities and distribution networks across mediums and markets while maintaining its 99-year legacy of editorial independence, [there] has enormous potential to create value for all of Simon & Schuster’s stakeholders.”

Read more: Penguin Random House Calls Off $2.2B Simon & Schuster Deal

Still, the news has been met with skepticism, as figures in the literary world recall 2015’s fiasco when Macmillan was bought by a private equity firm for a paltry sum—the quality of the publisher’s books then went in rapid decline—and other grim tales of companies gobbled up and transformed by unforgiving financial markets.

Maris Kreizman, an essayist and literary critic, spoke of this fear: “The fear that we’ll look back on today and think, well, that was the beginning of the end.”

Mike Jung, author of several novels, has been even more outspoken with his distaste of the acquisition, stating that “KKR, which is possibly the most vile example of a private equity firm that acquires, eviscerates, and kills off companies for profit, is on the verge of buying Simon & Schuster. Very, very bad news.”

Gustavo Schwed, a professor at New York University’s Stern School of Business, spoke of the inherent risks of the transaction “The amount of debt KKR uses to finance the acquisition will help determine the publisher’s financial constraints. Sometimes, despite your best intentions, things crash and burn — and the more leverage you use, the more risk there is of that happening.”

Despite these warnings, KKR’s chief executive Jon Karp still believes this is a move in the right direction, stating: “With KKR’s support, we look forward to collaborating on new strategies that will enhance our ability to provide readers a great array of books and to give authors the best possible publication they can receive.”

Only time will tell what changes this first-of-its-kind deal will bring, in the meantime both the hopeful and the fearful will just have to wait and see.

Source: NPR