Penguin Random House parent company Bertelsmann has confirmed that it is interested in acquiring Simon & Schuster once ViacomCBS begins to again actively shop the country’s third largest trade publishing house after the pandemic fades Shortly after Viacom and CBS merged, the newly-formed company placed S&S on the sales block.
In an interview with the Financial Times, Bertelsmann chief executive Thomas Rabe said he was “interested” in S&S and that Bertelsmann would be ready to make a bid when the time comes. “We’ve been the most active player on the consolidation of the book publishing market in the last 10 years. We combined Penguin and Random House very successfully to create by far the largest book publisher in the world—actually, the only global book publisher,” he said in the interview. “Given this position, we would, of course, be interested in Simon & Schuster.”
Based on 2019 revenue, PRH is the country’s biggest trade publisher and the largest trade publisher in the world, while S&S is in third position. In between the two is HarperCollins, a company that has long been rumored to be interested in providing more of a challenge to PRH. At a recent town hall meeting, HC CEO Brian Murray acknowledged that the publisher was looking into the possibility of acquiring S&S, sources told PW.
Lagardère, parent company of Hachette Book Group, has also been seen as a possible S&S suitor. Lagardère's travel group has suffered major losses due to the pandemic, but the company recently said it was interested in building its business around both its travel and book publishing subsidiaries. HBG is the country’s fourth biggest trade publisher, with North American revenues of about $734 million.
A number of international publishers are reportedly considering making an offer for S&S, as are some private equity firms.
Bertelsmann had not been considered a likely buyer for S&S because of antitrust concerns, but Rabe discounted the likelihood that the government would block the deal. “We looked at this and we don’t think it is an issue,” Rabe told the FT. “If you look at the market holistically, particularly the strength of Amazon, and it includes self-publishing and the like, we don’t think this will be an obstacle.”
In 2019, PRH had global sales of €3.63 billion—about $4.32 billion at current exchange rates—with PRH US contributing about $2.2 billion. HC had total sales of $1.69 billion in the same year. HC parent company News Corp does not break out the publisher's sales by region, but the U.S. is estimated to account for as much as two thirds of the company’s total revenue, or about $1.1 billion. Combining HC’s sales with S&S’s $814 million will still keep HC in second place behind PRH in the U.S. Conversely, if PRH was the winner for S&S, it would form a company with revenue of almost $3 billion in the U.S. alone.