S&S acquired by private equity. What does it mean for the book business? 

This content has been archived. It may no longer be accurate or relevant.

From Nathan Bransford:

A big domino in book publishing fell this month as private equity behemoth KKR has acquired Simon & Schuster for $1.62 billion, rather less than the $2.175 billion Penguin Random House agreed to before that deal was quashed by a federal judge, though the blow to Paramount was softened by the $200 million PRH had to pay S&S when the deal failed to close.

This is… possibly good news for Simon & Schuster and the publishing industry writ large? It emerged during discovery for the Penguin Random House trial that S&S CEO Jonathan Karp had emailed a Paramount executive in 2020 that a financial buyer “would be better for the employees of S&S and arguably the larger book publishing ecosystem,” and sure enough, in an email to Publishers Lunch, Karp said “It was the outcome I’d hoped for.”

You can see why there’s some hope. Karp is keeping his job, S&S’s imprints remain free to compete with the other members of the Big 5 publishers (thus maintaining options for agents/authors as well as avoiding antitrust scrutiny), and S&S will likely avoid the waves of redundancy layoffs you’d expect with a merger with, say, HarperCollins. KKR is also supporting the creation of an equity program that would give employees a stake in the company.

However. S&S was already known as a lean operation and KKR is known for slashing and burning costs, so where exactly will additional efficiencies come from?

My personal worry has been that one or more of the major publishers would be acquired by a private equity company who would simply mine the backlist, which is the real cash cow in book publishing, and lay off (nearly) all the editors and support staff and essentially close up shop for new frontlist acquisitions, perhaps excepting a tiny handful of established bestsellers (like say Stephen King and Colleen Hoover). Karp, longtime readers may remember, made a name for himself with a lean imprint devoted to publishing one book a month on the grounds that publishers can only really focus on so many books at a time.

Please note that there are no indications that this is S&S’s plan, and I hope this remains mere nightmare fuel that does not come to pass.

Link to the rest at Nathan Bransford

PG says the “S&S’s plan” doesn’t make any difference now that the publisher is owned by an organization that is not run by English majors.

While PG is not privy to any of S&S’s numbers, cutting way back on S&S salary costs and office rent and mining the backlist likely makes more sense than continuing to try to make the traditional business of publishing reasonably profitable (by the standards of financially-savvy KKR execs) while spending lots of money on advances that are unlikely to earn out and paying New York City rents and low (by NYC standards) salaries for a very small return on equity.