Germany’s Bertelsmann To Buy Simon & Schuster for US$2.175 Billion

From Publishing Perspectives:

In news just released this morning (November 25) from Gütersloh and New York City, Bertelsmann, the parent company of Penguin Random House (PRH)—already the world’s largest publisher—has announced that PRH intends to purchase ViacomCBS’ Simon & Schuster for US$2.175 billion.

Of course, industry response will quickly include speculation about how regulators will look at a question of the largest Big Five publishers buying another Big Five house.

Among write-ups in the overnight drumbeat before the announcement, Benjamin Mullin and Jeffrey A. Trachtenburg at the Wall Street Journal wrote, “The deal could draw attention from the US Justice Department, [according to] David Meyer, a Washington antitrust attorney who served at the Justice Department as a deputy assistant attorney general under President George W. Bush. ‘Their combined share would be sufficient to motivate a close look at the transaction,’ he said.”

This echoes comments from News Corp CEO Robert Thomson who, at his stockholders’ annual meeting on November 18, said, “I would make one observation about Simon & Schuster. It will clearly be a serious antitrust issue if Bertelsmann acquires Simon & Schuster. However cute and clever the structure, if Bertelsmann is their beneficiary, it will be a book behemoth. And this will certainly be a profound antitrust issue for the entire book industry and, no doubt, for authors around the world.”

. . . .

Jonathan Karp, president and CEO of Simon & Schuster says, in a message to his staff members just provided to Publishing Perspectives, “We expect the transaction will likely close in the second half of 2021 at the earliest, subject to customary closing conditions, including regulatory approval.

“I understand that many of you will have questions about how this transition to new ownership will affect your work, and your benefits. I assure you that as this process unfolds we will share information with you, but understand that this will be a long process.

“Expect no sudden changes beyond the normal decisions we make in our regular course of business.”

Link to the rest at Publishing Perspectives

1 thought on “Germany’s Bertelsmann To Buy Simon & Schuster for US$2.175 Billion”

  1. Mergers aren’t all they’re cracked up to be.

    Ages ago, back when the technical workstation market was distinct from PCs, SUN MICROSYSTEMS was number one, HEWLETT-PACKARD was second, and APOLLO COMPUTER was third. In 1989 HP bought APOLLO and the pundits went wild, proclaiming that by combining market shares, HP was now number one.

    Scott MacNeally, the SUN CEO just shrugged. “Wait a year. Mergers take time to play out. And before I had to worry about two different competitors, now I only need to beat one.”

    Indeed, when 1990 numbers rolled out, SUN was still tops by a larger margin than before and the APOLLO brand was gone. Yay, SUN! Well…

    Only problem was that over in Seattle a game was afoot; Microsoft broke up with IBM and were no longer tied to single low end computers. By 1993 Microsoft released Windows NT for high end PCs (and low end workstations) and in 1998 Intel released their XEON line of processors. Suddenly, the previously separate premium priced workstation market had to compete with commodity priced PC workstations and servers that offerred a comparable experience at lower commodity hardware prices and access to PC office application software that was much cheaper than the closest workstation analogues. (Autocad on NT was at least as good as AutoCad on SUN or HP but the total cost was much lower on NT. Plus you got access to MS Office, Oracle, and Photoshop among many others.)

    By 2010 SUN was bought out by ORACLE.

    Moral: consolidation is more often a checkpoint on the road to irrelevance than the beginning of great things. By the time the new merger is done handing out pink slips and there is one less bidder for tradpub books, odds are the combined sales of the merged company will be less than the sum of the two in 2020. And while the BPHs circle the wagons, their (much bigger) competition in streaming, gaming, and Indie publishing will roll merrily along.

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