German media group Bertelsmann is set to acquire publisher Simon & Schuster for $2.17bn, less than a year after it took control of Penguin Random House (PRH).
Bertelsmann outbid Rupert Murdoch’s News Corp, which owns publisher HarperCollins, in a contest for the company that is home to Dan Brown, Hillary Clinton and Stephen King. ViacomCBS put the company up for sale this year in order to refocus on its online and advertising operations.
The deal represents the second major move in Bertelsmann CEO Thomas Rabe’s drive to consolidate the conglomerate, after the 185-year-old firm took full control of PRH. Bertelsmann owned Random House before acquiring Penguin from Pearson, forming PRH as a joint venture in 2013, and creating the world’s biggest publishing house. In 2017, Pearson sold its 22% stake in PRH to Bertelsmann.
“This acquisition will create enormous added value for our company,” Rabe said, announcing the deal on Wednesday. “We are building our position as one of the leading creative content companies in the US … I’m convinced that this a good day both for book publishing and for authors.
“The book business has been part of Bertelsmann’s identity since the founding of C Bertelsmann Verlag more than 185 years ago and has lost none of its appeal … Bertelsmann continues to be one of the world’s leading creative companies with annual investments in content of around €6bn,” he added.
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The deal to acquire Simon & Schuster – which reported revenue of $814m (£599m) last year, is profitable and employs 1,500 staff – is expected to close in 2021, subject to regulatory approval.
Rabe told reporters the merged entity would have a US market share of less than 20%, making the deal clearly “approvable”, noting that the 2013 merger of its own Random House with Penguin had met no objections from US regulators. Last week, News Corp chief executive Robert Thomson warned that a Bertelsmann win would lead to an anti-competitive “behemoth of books” that would control one=third of the US book market.
The merging of publishers over the last decade has lead to bestseller lists increasingly dominated by a handful of blockbusters from imprints that are part of the same umbrella publisher. Simon & Schuster currently publishes around 2,000 books a year, on top of a catalogue of 35,000 titles, while Penguin Random House publishes 15,000 titles a year.
Rabe described books as the “past, present and future” of Bertelsmann but also highlighted the US publishing deal’s significance for its digital content as people turn to e-books or listen to audiobooks.
Markus Dohle, Penguin Random House CEO and a member of the Bertelsmann executive board, said: “We are very proud to welcome this esteemed company, founded in 1924, to our global publishing community. We share the same passion for books and reading and will work together to give our authors the greatest possible access to readers worldwide. PRH empowers its 320 publishers around the world with maximum creative and entrepreneurial freedom and will, of course, extend this to our new colleagues at Simon & Schuster.”
Founded as a publisher of theological texts, Bertelsmann is a private conglomerate spanning magazine, educational and music publishing, and also controls European TV group RTL.