Paramount’s Strategic Move: Simon & Schuster Acquisition Secured by KKR, a Prominent Private Equity Powerhouse

Major Changing of the Guard in the Books Business

Paramount said on Monday it had reached a deal to sell Simon & Schuster, one of the biggest and most prestigious publishing houses in the United States, to the private-equity firm KKR, in a major changing of the guard in the books business.

Financial Buyer Takes Control of Cultural Touchstone

The deal, for $1.62 billion, will put control of the cultural touchstone behind authors like Stephen King and Bob Woodward in the hands of a financial buyer with an expanding presence in the publishing industry.

• Private equity investors have had a significant footprint in the book business
• The acquisition vastly increases the hold of financial interests in the business
• Simon & Schuster’s management team is thrilled with the result

Well-Known Names in Publishing Industry Involved in the Deal

Richard Sarnoff and Ted Oberwager, both industry veterans, are involved in the deal.

• Richard Sarnoff understands the nuances of the book business
• Ted Oberwager is a respected figure in the gaming, media, entertainment, and sports group

Publishing Industry Worries and Regulatory Concerns

The sale of Simon & Schuster raised concerns in the publishing industry.

• A sale to another publisher would mean further consolidation in the industry
• Regulatory scrutiny was a concern in previous attempts to sell Simon & Schuster

Risks and Opportunities of Private Equity Acquisition

Acquisition by a private equity firm presents its own risks and opportunities.

• KKR’s investment will help determine the publisher’s financial constraints
• KKR’s previous successes in the book industry with RBMedia and Overdrive are encouraging

Potential for Financial Benefits for Simon & Schuster Employees

As part of the deal, Simon & Schuster employees will receive an ownership stake in the company.

• KKR’s ownership program improved engagement among employees in previous acquisitions
• Employees had a cash payout when RBMedia was sold

Long and Bumpy Road to the Deal

The sale of Simon & Schuster has faced challenges along the way.

• The Biden administration challenged the previous sale to Penguin Random House in court
• Simon & Schuster has performed well, making it an attractive purchase
• The offer from KKR is unlikely to raise red flags with regulators