Paramount has withdrawn its bid to sell Simon & Schuster to Penguin Random House, three weeks after a federal judge blocked publishing giant PRH’s attempt to take over its smaller competitor.
The merger of the two publishers would have reduced the competition in this industry to just four large companies instead of the current “Big Five”. The proposed merger raised antitrust concerns within the Biden administration’s Justice Department.
The decision to terminate the purchase agreement was announced Monday by S&S President and Chief Executive Jonathan Karp.
“[T]there will be no appeal here of Judge Florence Pan’s decision to block the merger of the two companies,” he wrote in an email to staff obtained by The Times.
“This news is fresh, and at this time I don’t have any concrete information about what will happen in the coming months,” Karp continued. “You may read or hear rumors and speculation about our future, but rest assured that I will update you as soon as there is relevant news to share.”
He added that S&S “has never been more profitable or valuable than it is today” and currently has the best-selling backlist in the publishing industry.
Paramount – formerly ViacomCBS – also owns CBS, Showtime, BET, Comedy Central, MTV, Paramount Pictures, the streaming service Paramount+, and a number of other brands. It had hoped to complete the merger a year ago before it encounters regulatory headwinds. The sunk sale is a setback for Paramount, which has been trying to raise funds by dumping some assets.
When it launched Simon & Schuster shortly after the merger of Viacom and CBS, Paramount received several offers, including from HarperCollins, another Big Five publisher. The conglomerate accepted a $2.18 billion bid from Penguin Random House, owned by the German conglomerate
Bertelsmann, November 2020.
At the time, Paramount said Bertelsmann had agreed to pay a termination fee if regulators blocked the deal, but didn’t disclose that number.
But in early 2021, the Authors Guild, the National Writers Union, four other authors groups, and the nonprofit Open Markets Institute sent a letter urging the Justice Department to block the deal, stating that the merger would benefit “well over half of… would bring key US book markets under the control of a single company, posing a multitude of potential threats to freedom of expression and democracy in the United States.”
Longtime Simon & Schuster author Stephen King, who had publicly criticized the deal, was among the government witnesses at the federal trial in August. He recalled that when he first started writing books in the 1970s, there were hundreds of prints as opposed to now.
“Consolidation is bad for competition,” King said during the trial. “That’s my understanding of the book business. The more companies there are, the better.”
On Monday, admirers of Penguin Random House accepted the reality of the situation.
“Penguin Random House remains convinced that it is the best home for Simon & Schuster’s employees and authors, and together with Bertelsmann we have done everything possible to complete the acquisition,” a spokesman said in a statement on Monday .
“We believe the judge’s ruling is wrong and planned to appeal the decision, confident that we could present convincing and persuasive arguments to overturn the lower court’s appeal ruling. However, we must accept Paramount’s decision not to proceed.”
Meg James, a Times contributor, contributed to this report.
https://www.latimes.com/entertainment-arts/books/story/2022-11-21/simon-schuster-penguin-random-house-sale-withdrawn-paramount Paramount pulls offer to sell publisher Simon & Schuster