ViacomCBS Unloads Simon & Schuster For More Than $2 Billion

ViacomCBS Unloads Simon & Schuster For More Than $2 Billion

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mCBS today announced it has sold its Simon & Schuster book publishing division to rival Penguin Random House for $2.175 billion, as it pares down debt and focuses on streaming and other businesses with higher potential for growth.

The divestiture follows a review of non-core assets New York-based ViacomCBS began earlier this year in the wake of the CBS-Viacom merger. Random House, which is part of Germany’s Bertelsmann media conglomerate, beat out bidders at a “highly competitive auction that attracted bidders from around the world,” according to ViacomCBS. The companies expect the transaction to close in 2021.

Going forward, Simon & Schuster will be managed as a separate publishing unit under the Penguin Random House umbrella. Simon & Schuster Chief Executive Jonathan Karp and Dennis Eulau, the company’s chief operating and chief financial officer, will be retained by Penguin Random House.

“The book business has been part of Bertelsmann’s identity since the founding of C. Bertelsmann Verlag more than 185 years ago and has lost none of its appeal to this day,” said Thomas Rabe, Chairman & CEO of Bertelsmann, in a press release. “Bertelsmann will finance the acquisition of Simon & Schuster from existing cash resources. External borrowing is not necessary, thanks partly to the overall positive business development since the summer and the already completed sale of various businesses, investments and real-estate properties.

Shares of ViacomCBS were little changed in trading ahead of the Thanksgiving holiday, as was Bertelsmann stock in Frankfort.

Founded in 1924 by Richard L. Simon and M. Lincoln Schuster, Simon & Schuster is the smallest of the so-called “Big 5” trade book publishers, with $830 million in 2019 revenue, according to Reedsy.com

The late media tycoon Sumner Redstone, whose family controls ViacomCBS, acquired the publisher in the 1980s.  

Penguin Random House is the largest U.S. book publisher,  with more than 15,000 new titles, and more than 600 million print, audio and eBooks sold annually. Its titles include former President Barack Obama’s best-selling memoir A Promised Land.

The Simon & Schuster transaction likely will trigger an antitrust review by the U.S. Department of Justice, the New York Times said.

Bertelsmann’s other U.S. assets include the Freemantle TV production business, home to  American Idol, the Price is Right and Family Feud among others and its Bertelsmann Music Group (BMG) division. It invests around €6 billion ($7 billion) in content annually.

According to Publisher’s Weekly, the sale of Simon & Schuster will be the largest acquisition in North American trade publishing since HarperCollins bought Harlequin in 2014 for $350 million. HarperCollins is part of Rupert Murdoch’s News Corp publishing business and reportedly was a bidder for Simon & Schuster. Harper Collins could become the favorite to buy the trade business of Houghton Mifflin Harcourt
HMHC
that the company announced earlier this month was for sale, the trade publication says.

Founded as a producer of crossword puzzles, Simon & Schuster has more than 30 publishing units and a line-up of best-selling authors including Stephen King, Bob Woodward, Annie Proulx, Doris Kearns Goodwin and Jason Reynolds. The company also is the home of literary masters including Ernest Hemingway, F. Scott Fitzgerald and Edith Wharton.  It employs 1,350 people.



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