In Praise of the Worker-Owned Company (OR: What to Do About Simon and Schuster)

From The Literary Hub:

Well, Simon & Schuster is not going to be sold, for now. A federal judge ruled in October that Penguin Random House couldn’t buy the publisher, and since then, Simon & Schuster’s parent company has decided against mounting an appeal. That said, the future of America’s third-largest publisher still remains uncertain. Simon & Schuster’s owner seems intent on selling, with potential buyers reportedly including HarperCollins, Hachette Book Group, or—gulp—an unnamed private equity firm. As a new author with Atria Books (a Simon & Schuster imprint) none of these options seem especially great. What will happen to Atria? To my wonderful editor? My first book?

Following mergers between major publishing houses in the past, corporate executives have cut jobs, folded imprints, and canceled author contracts. My novel is scheduled to debut next August. My wonderful editor assures me that things will be fine, and I trust him. He is, after all, wonderful. Unfortunately, these kinds of things aren’t up to him. Even the most wonderful editors get no say when it comes to major decisions regarding the future of the “Big Five” publishing houses.

In publishing, as with far too many industries, democracy is all but absent in the workplace. The people who do the day-to-day work of running Simon & Schuster—the editors, marketers, publicists, cover artists, copyeditors, accountants, and so on—don’t get a vote on whether their company should be sold, or to whom. We tend to think of this structure as the natural capitalist order—employees do the work, corporate executives and investors call the shots—but it doesn’t need to be this way.

Our nation’s third-largest publisher doesn’t have to be owned by a mass media conglomerate or a private equity firm. There exists another option, one that would bring much-needed democracy to publishing by putting decision-making power into the hands of the very people who know books best: let the employees of Simon & Schuster purchase Simon & Schuster. They do the work, after all. Let them own their company. Let them call the damn shots.

Worker-owned cooperatives are so rare in America that it’s difficult for us to imagine the sense of pride and ownership that comes when we work for ourselves, participating actively in major company decisions, sharing equally in profits and losses.

But the idea of employees buying and running their own company—even here in America, even in publishing—isn’t as utopian as it sounds: the workforce of WW Norton has successfully owned and managed the venerable publishing house since shortly after World War II, when Mary Norton sold her stock to the company’s editors and managers. They drew up a Joint Stockholders Agreement that still remains in effect, allowing active Norton employees to elect leadership, participate in decisions affecting the company’s future, and share profits. Anyone who leaves Norton must sell back their shares, ensuring that no outside market exists for ownership of the company. There is no risk of a hostile takeover, no fear of an unexpected sale. The employees are free and independent to do what they have done so well for decades: publish kickass books, from classics like the Feminine Mystique and Clockwork Orange to newly released knockouts like The Immortal King Rao and Activities of Daily Living.

By comparison, four of the Big Five publishing houses are subsidiaries of global media conglomerates which are, in turn, majority-owned by four billionaire families from Germany, Australia, and the United States. (Hachette Books, the outlier, is a subsidiary of a global media conglomerate that is minority-owned by a billionaire family). Simon & Schuster is owned by Paramount Global, which is operated and owned by a private “mass media holding company” called National Amusements, which is based in Massachusetts and owned by the billionaire Redstone family. Paramount Global, in an official 2020 press release, gave three reasons for selling the “non-core asset” that we writers and readers refer to as Simon & Schuster:

  1. to fund Paramount’s new streaming services
  2. to pay down debt
  3. to “fund the dividend”

It would be inconceivable for the owners of WW Norton to make such a decision, or even to face such a dilemma, precisely because Norton is owned by its employees. Presumably they would choose not to cannibalize themselves to make wealthy stockholders a little wealthier. Presumably they would not refer to themselves as a “non-core asset.”

But Simon & Schuster, with approximately 1,500 employees, is a far larger company than WW Norton. Could America’s third-largest publisher seriously operate as a cooperative? For inspiration, let’s zip across the Atlantic; the Mondragon Corporation, founded in Spain in the 1950s, is a federation of over 200 cooperatives and organizations that together employ over 80,000 people who collectively own and manage every aspect of their many businesses.

Link to the rest at The Literary Hub

Color PG skeptical about this proposal.

The reason that Simon & Schuster is for sale is that its owner, Paramount Global, wants a big check. Paramount Global wants a big check because, after going through a hierarchy of companies, the wealthy family that ultimately owns and controls S&S wants a big check. In this case, the wealthy family is the Redstones.

PG doubts that the employees of Simon & Schuster collectively, have enough money to satisfy the Redstones. After all, traditional publishing is noted for not paying its employees very well. PG doubts the Redstones would agree to set up a payment plan with the employees. If the Redstones want to sell, PG suspects it’s because they want a big check.

Would a bank or another rich family want to buy Simon & Schuster? PG has his doubts because the traditional publishing business doesn’t earn much money any more. S&S is worth something, but likely not enough to induce anyone responsible to loan the employees the money to pay the Redstones. But, as usual, PG could be wrong.

25 thoughts on “In Praise of the Worker-Owned Company (OR: What to Do About Simon and Schuster)”

  1. Joining in with PG here:

    The obvious response to PG’s well-taken point that “the collective of S&S employees doesn’t have enough money to pay Shari Redstone what she thinks she’s entitled to get from a sale” is “well, they can just borrow it — banks, bonds, subscription efforts like NPR, even venture capitalists.” The fatal flaw in this rejoinder will become obvious at the first financial challenge faced by the new company† when one (or more) of those groups of creditors demands a bigger say in steering the Empress of Ireland, thereby subverting — and perhaps entirely removing — the vaunted “employee control.” This runs into the primary problem of People With Money: Their belief that because they already have money, they’re smarter than/better managers than those who run into trouble with money. Exhibit A: Sears. Exhibit B: General Motors. Exhibit C: United Artists (cutting a bit close to home there, aren’t we?). I’m going to run out of letters long before I run out of well-documented examples just in the US just in the last half-century… and before discussing the irony of how Shari Redstone came to ultimately be in control of S&S.

    † And there will be one. I’m not predicting what it is, or when, except that it will be serious, within three to five years, and may well already be inevitable.

  2. Nice idea: leave the employees holding the bag? The ones who put their financial futures in the hands of one of the last dinosaurs?

    The only good thing might be if said employees are capable of doing everything PG has advocated for years: getting out of Manhattan, not paying the upper management huge bonuses, giving the lower levels (including interns) a living wage, accepting the election (ebooks) and lowering prices on said to what they cost instead of propping up hardcovers, selling directly WELL, changing the returns system. POD would probably be too much to ask, but there ARE plenty of cost-cutting measures that might work – but have been resolutely ignored by those benefiting, for years.

    It would still be a maybe if the same people are in charge and have no intention of changing, but the new buggywhip company might survive a little longer than its former peers, too.

    PS FOUR sets of captcha squares with cars and traffic lights DOES seem excessive.

  3. Whatever they do, it needs to be quick. Corporate publishing isn’t getting any more profitable this decade. If nothing else, because inflation is a one way street. Costs are never going back to what the were. And if they expect to raise prices to match they’ll discover just how “indispensable” their products are.

    S&S right now is perfect for a corporate raider teardown: the IP catalog is worth more than the rest of the business. In fact, it might be worth more than the entirety of the company. And antitrust won’t stop, say, Bertlesmann from buying the IP since the trial was about the market for future book contracts, not existing rights. In fact, Amazon would jump at that.

    It won’t be $2B since that was a huge overpay but it might half that which is what Paramount expected in the first place. The remnant carcass they can spinoff and IPO to the penny stock market or fully shut down. Or maybe the staff’s relatives will buy it out. That would be fun to watch.

    • And if they expect to raise prices to match they’ll discover just how “indispensable” their products are.

      Did a bit of xmas shopping for the paper reader on my list. Went to a newly opened full price “aspirational” bookstore in the neighborhood – you know the type, bright, airy, smiling, not too big, full of hope for the future of the big-5, started by someone with too much money and time on her hands. The prices – they also were full of hope. Lots of hope there, yes indeed.

      No issues with the captchas.

      • Prices increase over time on everything. You could buy a new Chevy for around $7,500 in the mid-’70s. Today, it’ll cost around $20, 000, but there are more auto manufacturers than ever.

        • Studebaker and AMC are history.
          Chrysler is gone, ruined by Daimler, gifted to Fiat.
          Around the world dozens of brands have been absorbed or outright killed.
          Car loans average six years instead of three or four in the ’70’s.
          GM went bankrupt and was gifted to the UAW, FORD is in hock to the hilt.

          The global auto industry is *not* healthy. Global overcapacity, debt load, and forced transition to electrics without proper supply chains in place nor sufficient capacity of critical components, specifically batteries are not traits of a safe manufacturing business.

          And now, ideologicaly-driven IdiotPoliticians™ are triggering a trade war with the EU over EVs and even planning to ban internal combustion cars after 2030 in a state that can’t even meet its current power needs and has a rickety transmission network.

          Not an exemplar industry.

          As for trade book publishing it has been stagnant since 2003 and with steadily declining sales since 2008, reporting unadjusted revenue “growth” lower than the low inflation of the past decade, despite phasing out the bulk of mass market paperback releases in favor of the more expensive trade paperback format.

          All the while, paper costs have been steadily rising and availability declining because of the changing economics of dead tree pulp (a whole story unto itself) and book printing has stampeded to China in search of lower costs.

          And then the pandemic hit.
          Globalized supply chains are being phased out and China is moving to perpetual lockdowns.

          And injecting trilions of dollars of government largesse into the economy has triggered the largest inflationary wave in half a century just in time for a 19th century style war of conquest to create a global energy crisis at a time local ideologues are determined to minimize US energy production even if it means supporting a pariah autocratic narcostate.

          Fun times.

          All the while, other industries competing for disposable income entertainment revenue (notably gaming and video) are growing like weeds and increasing their share of eyeball-hours.

          In the two years since Paramount put S&S up for sale they only received two serious bids, both overpays from bigger NYC corporate publishers and the DC trustbusters just did a 180 from 2012 and arranged to block the sale.

          Which brings us to the OP, promoting the idea of an employee buyout (not unheard of) but based on a fallacious premise: that S&S is a viable long term standalone operation worth the asking price. It isn’t. The two bids Paramount received were based on the value of S&S IP and the prospect of shedding the bulk of the 1500 employees.

          As I said above, the only way Paramount can get rid of their monkey’s paw is to find a corporate raider or venture capitalist interested in the IP (backlist sales are a major component of BPH revenues these days) because new book publishing by itself isn’t a terribly profitable use of increasingly limited and expensive capital. (Inflation again.)

          Hmm, maybe trade book publishing *is* comparable to cars, after all. Just not the good part.

          • Speaking of the looming transatlantic trade war, this just dropped:


            The EU doesn’t like the US copying several pages out their industral policy playbook and showering cash on “national champions” just like they have for three generations.

            Mind you, the timing is bad given the war but if they hadn’t gotten so addicted to cheap russian energy in the first place…
            They *were* warned.

          • It’s much, much worse than that, Felix. Your invocation of “switching to electric” forgot about lack of charging stations, lack of training and tools and equipment for maintenance, differing post-mishap repair priorities that will distort insurance, even such seemingly mundane things as first responders having to maintain accident-site competence to deal with four distinct hazard sets (diesel, internal combustion, hybrid, and pure-electric).

            And the different roadway and parking requirements.

            And everything related to non-passenger vehicles; don’t even think about how the differing weight distribution of (engine plus fuel tank) versus (motor plus battery pack) will influence capability, design, and everything else of the front-end loader needed to build that charging station down the street… or whether the electric motor provides the right responsiveness and torque for the job in the first place… or how long it’s going to take to train equipment operators on the differences.

            And different temperature envelopes (starting a cold IC engine in either Edmonton or Tegucigalpa is a fairly easy adaptation; electric motors and batteries, not so much).

            • In California’s defense ( 😉 ) they are only banning *new* IC vehicles. People can keep operating their 50 year old gas cars forever, like in Cuba. Lots of work for aging auto mechanics.


              “As california goes, so goes the country.” And Newsome has no intention of stopping at the border.

              Of course, Tesla is sitting pretty: they own the biggest charging station chain and are starting to build a parallel chain of high speed high power chargers along the interstates for their 18 wheelers, the first of which are today shipping to Pepsico. Those will charge their trucks to 80% in half an hour. Considering their truck can go 500 miles per charge with a full 80,000 lb load they might be the only vendor ready by the time the law kicks in.

              Naturally, that assumes there is still a California by then.
              (The big one still looms. 😀 )

              • actually, most of the faults in the state are strike-slip faults, which although they can do plenty of damage (I live about a mile from one) have an upper limit in terms of severity and proper building codes go a long way towards mitigating that.

                The *real* big one is off the coast of Oregon/Washington. The Juan de Fuca plate is a subduction zone, and when it goes there will be massive damage. This is a must-read article about “the really big one”.


                • Yeah, Seattle has some serious threats.
                  No just the fault, there’s also the volcano, the fires, the politicians… 😉

              • One wonders if the same jerks who took out that power substation in North Carolina will apply their skillz to Tesla stations if Musk allows the “wrong” people on teh tweety thing.

                No, not if, when. And unlike with liquid fuels, one has to rebuild the infrastructure back out — no temporary tanker-truck stations. (One learns a lot about logistical/security vulnerabilities when planning to move a reinforced tactical air wing 2500km or so on two weeks’ notice; been there, done that.)

              • The liquid fuel infrastructure isn’t much safer.
                There was that little thing with the hacked pipeline:


                Civilian infrastructure isn’t designed to milspec as it’s not supposed to be threatend enough to require it. A form of self insurance.

                As to Musk, his other company, SpaceX just announced a new division for military contracts…err, services… called STARSHIELD. It’s first product is a STARLINK derivative for the military using LASER-linked satellites. After months of fending off russian atacks even his civilian network has proven robust enough for SPACE FORCE to trust the enhanced version. Cha-ching.

                And USSF is keeping an eye on STARSHIP. A quick launch 100ton to orbit spaceship meets sooo many of their dreams…

                They’ll need bigger guns to mess with those systems.

      • For nesting purposes putting this here —

        That New Yorker article on the fault lines was great. Very educational and quotable. No idea tsunamis were rated the least survivable (after lava flows, surely?) of weather events, nor have I ever considered the true consequences of geological event patterns happening at too long of an interval.

        Definitely worth filing away, especially the details about the scientists playing detective and piecing together the oral histories of the American / Canadian Indians to corroborate their data. The article feels like the outline of a sci-fi novel, but I can’t put my finger on what story this reminds me of.

        All those Hallmark movies set in the Pacific Northwest had me thinking I’d like to live there for a bit. Nevermind now, I’m good 🙂

        If smart politicians existed, preparing for Juan de Fuca would make for an incredible public works project. But it seems humans are wired not to take preventive action until someone first dies from the preventable thing, so …

        Off-topic, I know. Carry on, y’all.

        • Grew up around here (Seattle), been hoping to pile some politicians into the Juan de Fuca subduction zone since the 60s. I’m not too picky about which party, either — Democrat, Republican, OWL.†

          What would make a tsunami around here even more fun is the set of active volcanoes right next door. You’ve probably heard of one of them: Mt St Helens, which is only 100km from Puget Sound. One wonders if those volcanoes might be, well, encouraged by a major shift in the subduction zone…

          † Washington has a long tradition of getting… less than entirely serious candidates onto the ballot. Like GoodSpaceGuy, even after the legislature tightened the ballot-access rules in response to the OWLs in 1976. Which was entirely unfair — Archie “Whiplash” Breslin (whose official voter-pamphlet photo showed him wearing one of those 70s white-canvas-and-padding neck braces) would have been a better insurance commissioner than either of the major-party candidates, both of whom proved in later years to be… ummmm… ethically and penologically challenged.

          • Those guys are a hoot to read about 🙂 I wonder who GoodSpaceGuy thinks is BadSpaceGuy? Musk, Bezos, or Branson?

            Also, the volcanoes? I failed to factor them in. Now the nightmare fuel is complete, and the PNW is officially a post-apocalyptic show waiting to happen.

            • Please advertise that throughout California. We don’t need more illiterate drivers (that red thing on the side of the road challenges the reading ability of any California driver with a single word).

              And Atlanta. Georgia drivers are even worse.

            • Maybe the Angry Astronaut?

              He’s loud, undiplomatic, and seriously ticked off at the old space establishment (most of the time). His favorite rants are about Blue Origin and Boeing. He fanboys Sierra Nevada and the Brit spaceports.

              Generally amusing. Usually right, too.

          • Definitely Dwayne Johnson material. They can mash up “San Andreas” with “Dante’s Peak,” and add in the Indians and Kenji Watanabe. The set pieces will be glorious.

            Watanabe can remind them of the anecdote I read about after the Tohoku tsunami, where a village realized a landmark that stood for centuries was actually a warning from their ancestors: don’t build below this landmark, or you will be killed in a tsunami. Add in the spooky anecdote about the Pachena Bay People and a scene in the Ghost Forest and you’ve got suspense.

            Plus, since that one guy is named Goldfinger they get to make James Bond jokes for comic relief. Movie writes itself.

  4. Kumbaya is not a business plan. Companies run by the workers, for the workers, etc., head rapidly into squabbling and territorial disputes. Benevolent managers can be found, but employee-managed companies are not something I would ever sign up for.

    A company is an engine for making money. It uses people and services for the purpose. Even when it does not itself industrially manufacture items, it buys the services it needs or the items it resells. If the engine doesn’t make a profit, either directly, or by its continuation after being sold as a unit, then the engine (eventually) ceases to exist, even if the parts have life.

    Obviously this is unpleasant for the workers in such companies (and I imagine many of us have been there — I know I have). But that’s how it works. The wailing and gnashing of teeth about the “unfairness” of it all is entirely misguided. If I wanted to make myself valuable to an acquirer, I would become the IP expert of the company and start making myself known for that. I would also find a way to bring myself to the attention of an ally on the management team so that they understand more about their best asset, so that you can participate in the front of the negotiation (even at a low level) with a champion seated at the table. There is value in being able to guide an acquirer into the worth of an asset they plan to keep, and (if nothing else) you can stay employed longer with a better resume, even if just as the necessary assistant to the hot-shot they put in charge of the asset. Said hot-shot might take you with him on the next raid.

    Even if all that fails to save you, the effort made to level up in this way and take initiative will serve you well with your next job search. Employers worth serving appreciate employees who are always looking for ways to make their company more valuable.

    When one of my businesses was about to do a major downsize shutting down a regional office (me included), I was able to help some of my data techs survive a little longer by assigning them some industry cold-calling for data center services. This was, as you might imagine, not in their comfort zone. But (in the spirit of whatever it took to get a few more paychecks) they buckled down to it with my coaching. No sales resulted (I didn’t expect any) but they acquired experience which will never do them harm, and showed gumption which couldn’t hurt their next employment. Cold comfort, perhaps, but better than nothing. [They were already polishing their native skill sets for employment on their own.]

  5. My first thought reading the article: Does the OP consider the authors producing manuscripts to be “workers”?
    If not, why not? Without them, no need for any of the others. Well, except for lawyers looking after the IP (Backlist).

    PS, I’m still opposed to these captchas. I’ll go away now.

    • Without the ball bearing suppliers, no need for any of the other Ford Motors employees.

      But, it’s lots harder to produce bearings than a novel.

  6. Numbers, numbers…

    Just before Paramount put S&S for sale they reported a net profit of $200M.
    They employ around 1,500 people earning an average of $50,000 or about $24 an hour.
    (That is 80% of the US average.)

    To buy out Paramount at 50% off from the Bertlemann bid, or $1B, would require each employee to find $666,666. (A familiar aggregation of digits, twice. 😀 ) Whether S&S is actually worth that is unclear, though.

    That $200M net produced by those 1,500 employees works out to a productivity of $64 per hour per employee. The US average productivity in 2020 (same year) was $71.53 per hour.

    How much of that $200M S&S net came from backlist sales vs new releases is unclear but if somebody (say Ingram) were to buy the backlist only and put it on POD and digital they could rake in a substantial sum without much in the way of ongoing costs. If that somebody were Amazon it might be a pretty good test of book price elasticity.

    Given the trends in trade book publishing and the general economy I’m not sure those 2020 sales numbers will be repeatable moving forward.

  7. let the employees of Simon & Schuster purchase Simon & Schuster.

    Great idea. This is what is possible with capitalism. The employees could form a shell company for the purpose of taking over S&S, fund it with their own money, and bid on the company just like any other player.

    Then they can decide what to do with the employees who choose not to participate. Keep them and immediately have an owner/employee situation, or fire them and start with a clean slate.

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