KKR investment fund buys Simon & Schuster publishing house for $1.6 billion – Kommersant

Yesterday, August 7, the American telecommunications conglomerate Paramount announced on the sale of the Simon & Schuster publishing house to the KKR investment fund. The deal will amount to $1.62 billion, the entire amount will be paid in cash. Under the terms of the deal, Simon & Schuster will be a separate, private company and will continue to be led by current CEO Jonathan Karp.

Simon & Schuster is one of the most famous American publishing houses founded in the 1920s. It now ranks third in the US book market with an 8% share. Simon & Schuster has published books by writers such as F. Scott Fitzgerald and Ernest Hemingway, as well as many of the bestsellers of recent decades, including books by Stephen King and Dan Brown. The company’s revenue reached a record $1 billion last year, while operating profit rose 16% to $248 million.

Plans to sell Simon & Schuster were first announced in 2020. In the same year about his purchase agreed the largest Anglo-American publishing house Penguin Random House – then the deal amounted to $ 2.2 billion. However, in 2022 the court blocked this deal at the request of the US Department of Justice, which felt that such a merger would limit competition in the book market, so that in the end Paramount refused from sale.

Experts note as a positive fact that Richard Sarnoff, KKR’s media deal consultant, is close to the publishing business. He worked for Bertelsmann, which owns Penguin Random House, and was also head of the American Publishers Association. At the same time, unlike the merger with Penguin Random House, such a deal does not reduce the number of publishers, which means it does not threaten competition and is unlikely to attract the attention of regulators.

However, as Gustavo Schwed, professor of management at the Stern School of Business at New York University, points out, KKR, like many investment funds, can impose more severe financial restrictions on the publisher. According to him, in such cases, “sometimes, despite the best intentions, everything collapses and burns – and the more leverage you use to influence, the greater the risk that this will happen.” “Simon & Schuster were especially good in controversial areas. Will this continue with KKR?” says literary agent Richard Pine. So, in 2020 the publishing house published A highly candid memoir by Donald Trump’s niece Mary Trump.

Yana Rozhdestvenskaya