I wanted to be optimistic about this. I wanted to think that it would be good for someone to pump capital into the book publishing industry. I was hoping for something cool to happen. A Jimmy Stewart or Keanu Reaves type character to step in and buy Simon & Schuster. Instead we got some faceless soul-sucking dementor.
It seemed like good news when a federal judge blocked Penguin Random House from buying S&S back in November ’22. That purchase would have consolidated “The Big 5” into “The Bigger 4”. What ended up happening is that KKR was able to buy S&S for 600 million fewer dollars than PRH was going to buy it for.
While S&S CEO Jon Karp told the New York Times “I think I speak on behalf of the entire management team when I say we are thrilled with the result. They plan to invest in us and make us even greater than we already are. What more could a publishing company want?” Of course the management team is thrilled, they almost certainly negotiated a sweetheart deal. There was some chatter about all S&S employees receiving an ownership stake that will translate to a “life-impacting amount of wealth”. S&S wasn’t even doing badly when Paramount decided to put them up for sale. In fact they had a ‘stratospheric’ year in 2022.
I think one of two things are going to happen. Scratch that. I think one thing is going to happen, because it is the nature of private equity firms. KKR will make everyone feel good for the first year or so, especially with their “life-impacting amount of wealth”. They’ll then want to start seeing a return on their investment which will either require S&S to start churning out cheap cookie cutter content that they think will be successful. They’ll have decent enough AI pumping out Patterson-style content. Or they will just start eliminating the mid-level talent that keeps all organizations running. KKR will turn S&S into a husk after extracting every penny from the company and then sell off the brand to one of the other Big 4.
