Private equity firm KKR on Monday completed its acquisition of Simon & Schuster, one of the largest and most respected publishers in the United States, marking a major shift in the publishing industry.
Simon & Schuster’s former owner, Paramount, agreed in August to sell the publisher to KKR for $1.62 billion, making KKR, which has expanded its media holdings, a major player in the book business.
When the deal was announced, Simon & Schuster executives expressed optimism about the company’s plans, which included expanding its publishing business.
“They plan to invest in us and make us even bigger than we already are,” Simon & Schuster CEO Jon Karp said in an earlier interview with The New York Times. “What more could a publisher want?”
Many in the industry were also encouraged by the involvement of Richard Sarnoff, an adviser to KKR on its media deals. A well-known figure in publishing, Sarnoff previously held positions at Bertelsmann, the company that owns Penguin Random House, and was chairman of the Association of American Publishers, a trade group.
KKR also plans to introduce a profit-sharing model that will give Simon & Schuster employees an ownership stake in the company, a common benefit in publishing. KKR has deployed the program it developed to increase employee engagement at companies such as audiobook publisher RBMedia, which KKR acquired in 2018 and sold this year.
“Although many of us already feel like we own our work, by co-owning the company itself we will be a magnet for the best publishing talent and have a stronger say in shaping our shared future,” Karp wrote in a letter on Sent to employees on Monday.
For Simon & Schuster, which is nearly 100 years old and publishes distinguished authors such as Stephen King, Colleen Hoover and Bob Woodward, the deal comes at a time when the company’s profits have been higher than most of its competitors.
The deal’s completion also ends a long and tumultuous process that began when Paramount (then called ViacomCBS) put the company up for sale in 2020. An agreement was reached to sell Simon & Schuster to its rival Penguin Random House, the country’s largest book publisher. for $2.18 billion. The deal fell through after the Biden administration challenged the sale in court on antitrust grounds.
With a private equity owner in limbo, Simon & Schuster is likely to make more investments in its business than it has in recent years. KKR has announced plans to accelerate Simon & Schuster’s growth in international markets, expand into new genres domestically and expand its distribution business.
At the same time, there are aspects of marriage that could prove difficult. Publishing is unpredictable and slow, as books can take months or years to create, while private equity firms typically seek rapid growth and profitability.