which owns the Simon & Schuster book-publishing unit, said in a federal filing Monday that it has terminated its agreement to sell Simon & Schuster to rival Penguin Random House.
Paramount said that Simon & Schuster “remains a non-core asset” and that the publisher “does not fit strategically within Paramount’s broader portfolio,” suggesting Simon & Schuster eventually will go back on the sales block.
In a letter to staff, Simon & Schuster CEO
Jonathan Karp
said that he had “no specific information to impart about what will happen in the coming months.” Mr. Karp, however, described 2022 as “one of the single greatest years in our history” and said the company had “never been more profitable and valuable than it is today.”
The proposed $2.18 billion deal, disclosed in November 2020, was blocked on competitive grounds Oct. 31 by U.S. District Judge Florence Pan. Penguin Random House, which is owned by German media company Bertelsmann SE, said at the time that it would seek an expedited appeal and subsequently sought Paramount Global’s support.
On Sunday evening, however, The Wall Street Journal reported that Paramount Global had decided not to support the expedited appeal, effectively putting an end to the deal.
Under the terms of their 2020 agreement, Bertelsmann 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 Journal previously reported.
Paramount Global in its filing confirmed that Penguin Random House is obligated to pay it $200 million. A spokeswoman for Penguin Random House said Bertelsmann would make the payment.
Bertelsmann confirmed that the merger had ended. In a statement, Chief Executive
Thomas Rabe
said that the book business remains core and that “Bertelsmann plans to achieve annual growth of five to ten percent in this area—organically, but also through acquisitions.”
The Justice Department didn’t immediately respond to a request for comment.
The merger would have brought such authors as John Grisham, Stephen King and Bob Woodward under one publishing roof.
The Justice Department in November 2021 sued to block the deal, arguing that it was anticompetitive and that author advances for anticipated bestselling books would fall as a result of the deal.
Potential bidders for Simon & Schuster include HarperCollins Publishers, which like The Wall Street Journal is owned by News Corp, and Hachette Livre, which includes all of
SCA’s global book-publishing interests, according to senior executives at HarperCollins Publishers and Lagardère’s Hachette Book Group.
& Co. has also expressed interest in Simon & Schuster and could emerge as a potential buyer, the Journal previously reported.
It has been a challenging year for book publishers. Print-book sales are 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.
Write to Jeffrey A. Trachtenberg at Jeffrey.Trachtenberg@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8