A federal court stopped Penguin Random House’s attempt to acquire Simon & Schuster last month, and now Simon & Schuster’s parent company has formally terminated the acquisition deal.
On Monday, Paramount Global also confirmed that it was still trying to sell Simon & Schuster, a publishing house that has been around for over a century and whose writers included Stephen King, Colleen Hoover, and Bob Woodward. Bestsellers from Hoover and King have helped Simon & Schuster have a successful 2022 thus far. Both authors opposed the combination and testified for the government at the summer’s antitrust trial.
When Paramount revealed in early 2020 that it had performed a strategic evaluation of its holdings, the result was that Simon & Schuster remained a non-core asset. “Simon & Schuster is a very valued firm with a recent record of good profitability; nevertheless, it is not video-based and, thus, does not fit conceptually within Paramount’s larger portfolio.”
According to the original provisions of the deal, Penguin Random House must pay Paramount a termination fee of $200 million. Bertelsmann, a German company, owns Penguin Random House, the biggest publisher in the nation.
Simon & Schuster is one of the “Big Five” publishers, along with Penguin Random House, HarperCollins Publishing, Hachette Book Group, and Macmillan, and they may now make an offer. When compared to Penguin Random House’s $2.2 billion proposal, HarperCollins was one of many companies that came up short. Even Hachette’s CEO, Michael Pietsch, was interested in Simon & Schuster throughout the trial.
As reported by the Wall Street Journal, the CEO of the Authors Guild, which speaks for thousands of authors, has released a statement against mergers among the Big Five publishing houses.
On Monday, Penguin Random House released a statement claiming it was still certain it would have been the “ideal home for Simon & Schuster’s staff and writers” had they been successful in their appeal.
However, we must respect Paramount’s choice not to proceed,” says a statement from the publisher.
The announcement of the planned merger between the two publishing titans was made late in 2020, and it would have created the largest book publishing firm in U.S. history. However, the Department of Justice filed a lawsuit against the merger a year ago, claiming that the new entity would reduce competition for best-selling books and result in smaller payouts to writers. After a three-week trial, the government seemed to have won over U.S. District Judge Florence Y. Pan, who delivered a ruling in late October agreeing that now the merger would be bad for book publishing.
As part of a wider trend of the Biden administration’s attempts to vigorously implement antitrust law, her finding marked a departure from decades of tradition, during which several publishing mergers were authorized with minimal opposition.
Simon & Schuster CEO Jonathan Karp sent a statement to employees on Monday expressing confidence in the company’s ability to continue as a publishing house.
No matter who owns the company in 2024, “we will be celebrating our 100th anniversary in April,” he added.
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