Paramount Won’t Support Appeal of Ruling That Blocked Simon & Schuster’s Sale to Penguin
Paramount Global has decided not to support an appeal of a recent ruling that blocked the planned $2.18 billion sale of its Simon & Schuster book-publishing unit to rival Penguin Random House, according to people familiar with the situation.
Paramount is expected to announce a decision early this week, the people said.
Penguin Random House had said it wanted to pursue an expedited appeal, but it needed the support of Paramount Global.
Reuters earlier reported that Paramount was scrapping the deal.
U.S. District Judge Florence Pan ruled on Oct. 31 that the planned merger would unlawfully lessen competition. In a suit filed in November 2021, the Justice Department focused on author wages, arguing that if Penguin Random House were allowed to acquire Simon & Schuster, writers of anticipated bestsellers would likely receive smaller advances.
Under the terms of their 2020 deal, Penguin Random House parent Bertelsmann SE agreed it would pay Paramount a termination fee of $200 million if the acquisition were “completely prohibited or if the termination date is reached,” according to the Bertelsmann 2021 annual report. The termination date is Nov. 21, The Wall Street Journal previously reported.
Bertelsmann had talks with Paramount about offering inducements, including cash, that would lead Paramount to support an appeal and continue pursuing the transaction, the Journal reported.
Representatives for Paramount Global and Penguin Random House declined to comment.
If Penguin Random House had been allowed to acquire Simon & Schuster, it would have accounted for nearly 30% of all consumer-book sales in the U.S., according to book tracker NPD BookScan.
Simon & Schuster publishes such bestselling authors as
Stephen King,
Colleen Hoover and Jason Reynolds. For the nine months ended Sept. 30, Simon & Schuster’s revenue rose 19% to $863 million while operating income increased 30% to $223 million. Simon & Schuster recently published former Vice President Mike Pence’s memoir, “So Help Me God.”
This has been an uneven year for publishers, with print-book sales down 5.8% through Nov. 12 to less than 625 million units, after growing 8.4% and 11%, respectively, in the comparable periods of 2020 and 2021, according to NPD BookScan.
During the trial, Brian Murray, chief executive of HarperCollins Publishers, said the publisher would be interested in acquiring Simon & Schuster if it came back up for sale. HarperCollins, like the Journal, is owned by News Corp.
Michael Pietsch, chief executive of Lagardère SCA’s Hachette Book Group, said Hachette Livre, which includes all of Lagardère’s global book-publishing interests, would also be a potential buyer. In addition, KKR & Co. has expressed interest in Simon & Schuster and could emerge as a potential buyer, the Journal previously reported.
Write to Jessica Toonkel at [email protected] and Jeffrey A. Trachtenberg at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Paramount Global has decided not to support an appeal of a recent ruling that blocked the planned $2.18 billion sale of its Simon & Schuster book-publishing unit to rival Penguin Random House, according to people familiar with the situation.
Paramount is expected to announce a decision early this week, the people said.
Penguin Random House had said it wanted to pursue an expedited appeal, but it needed the support of Paramount Global.
Reuters earlier reported that Paramount was scrapping the deal.
U.S. District Judge Florence Pan ruled on Oct. 31 that the planned merger would unlawfully lessen competition. In a suit filed in November 2021, the Justice Department focused on author wages, arguing that if Penguin Random House were allowed to acquire Simon & Schuster, writers of anticipated bestsellers would likely receive smaller advances.
Under the terms of their 2020 deal, Penguin Random House parent Bertelsmann SE agreed it would pay Paramount a termination fee of $200 million if the acquisition were “completely prohibited or if the termination date is reached,” according to the Bertelsmann 2021 annual report. The termination date is Nov. 21, The Wall Street Journal previously reported.
Bertelsmann had talks with Paramount about offering inducements, including cash, that would lead Paramount to support an appeal and continue pursuing the transaction, the Journal reported.
Representatives for Paramount Global and Penguin Random House declined to comment.
If Penguin Random House had been allowed to acquire Simon & Schuster, it would have accounted for nearly 30% of all consumer-book sales in the U.S., according to book tracker NPD BookScan.
Simon & Schuster publishes such bestselling authors as
Stephen King,
Colleen Hoover and Jason Reynolds. For the nine months ended Sept. 30, Simon & Schuster’s revenue rose 19% to $863 million while operating income increased 30% to $223 million. Simon & Schuster recently published former Vice President Mike Pence’s memoir, “So Help Me God.”
This has been an uneven year for publishers, with print-book sales down 5.8% through Nov. 12 to less than 625 million units, after growing 8.4% and 11%, respectively, in the comparable periods of 2020 and 2021, according to NPD BookScan.
During the trial, Brian Murray, chief executive of HarperCollins Publishers, said the publisher would be interested in acquiring Simon & Schuster if it came back up for sale. HarperCollins, like the Journal, is owned by News Corp.
Michael Pietsch, chief executive of Lagardère SCA’s Hachette Book Group, said Hachette Livre, which includes all of Lagardère’s global book-publishing interests, would also be a potential buyer. In addition, KKR & Co. has expressed interest in Simon & Schuster and could emerge as a potential buyer, the Journal previously reported.
Write to Jessica Toonkel at [email protected] and Jeffrey A. Trachtenberg at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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