Penguin Random House, the largest book publisher in the United States, is owned by the German media conglomerate Bertelsmann. Adding Simon & Schuster, the third-largest publisher, would create a book behemoth, a combination that could trigger antitrust concerns.
The deal includes provisions that would protect ViacomCBS in the event that a sale is squashed by authorities. Bertelsmann would pay what is known as a termination fee if the deal does not go through.
The sale of the company will profoundly reshape the publishing industry, increasingly a winner-take-all business in which the largest companies compete for brand-name authors and guaranteed bestsellers.
The book business has seen wave after wave of consolidation in the past decade, with the merger of Penguin and Random House in 2013, News Corp.’s purchase of romance publisher Harlequin, and Hachette Book Group’s acquisition of Perseus Books.
Simon & Schuster, which publishes prominent authors like Stephen King, Don DeLillo, Bob Woodward, Doris Kearns Goodwin and Walter Isaacson, made an attractive prize for larger publishing houses seeking to grow through acquisitions. It has a vast backlist of more than 30,000 titles.
The past year has been tumultuous for Simon & Schuster. In March, it was put up for sale, just as the first wave of the coronavirus pandemic hit, destabilizing the economy and forcing bookstores to close, hobbling a major sales channel. In May, Carolyn Reidy, the company’s beloved chief executive, died suddenly and was later replaced by Jonathan Karp, who was formerly the publisher of Simon & Schuster, the company’s flagship house among dozens of imprints. The company also faced lawsuits from the Trump family and administration, as the president tried and failed to prevent the publication of books that were critical of him, by John Bolton and Mary L. Trump.
The company had a profitable year, in spite of such hurdles. Revenue grew to $649 million through September, an 8% increase, and profit before tax rose by 6% to $115 million.
Karp and Dennis Eulau, Simon & Schuster’s chief operating officer and chief financial officer, would remain the heads of the publishing house under new ownership.