September 3, 2020
Bertelsmann may place a bid for Simon & Schuster
by Ryan Harrington
“We’ve been the most active player on the consolidation of the book publishing market in the last 10 years.”
This is not the most obvious thing to brag about if the end goal for all of us is a healthy and de-centralized book publishing marketplace. Nevertheless, this quote from Bertelsmann CEO Thomas Rabe to the Financial Times speaks to the likely scenario that the trend of consolidation in the business is indeed going to continue.
The occasion for the quote is Rabe’s indication this week that Bertelsmann—the German media conglomerate that owns Penguin Random House—would be interested in acquiring Simon & Schuster when its parent company, ViacomCBS, is ready to pull the trigger on a sale.
ViacomCBS’s intent to sell was announced earlier this year, but it froze in its tracks just as the rest of the world did in response to the coronavirus outbreak.
But there may be challenges ahead for the acquisition. As Michael Cader writes for Publisher’s Lunch of the possible antitrust implications of the sale:
Any potential purchase would be subject to review, and would add 30 percent or more to Penguin Random House’s US revenues and unit sales. But Rabe does not believe they would be blocked by the government: “We looked at this and we don’t think it is an issue. 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.” They would certainly be challenged by others in the industry others, however, and some times the grind of governmental review is enough to derail a purchase. Both the Quad-LSC merger and the Cengage-McGraw Hill deals were terminated over lengthy reviews and potential divestitures.
Now I ain’t no big city lawyer, but I do know that this merger would result in one company having tremendous influence over the U.S. trade book market. It could also have the effect of creating more in house conflicts of the sort we saw in the Penguin Random House merger, leading to shuttered imprints, and fewer places for authors and agents to submit without triggering those conflicts.
ViacomCBS expects to re-start dangling S & S in front of bidders as early as this month.
If there is a silver lining to this look at the future it might be the mere fact that a company like Bertelsmann would be interested in expanding this area of its holdings at all. As Rabe says, books are “growing in importance for Bertelsmann. The business model is robust, the business is resilient and profitable.”
May it remain that way.
Ryan Harrington is a senior editor at Melville House.