Book Publishing Has a Toys ‘R’ Us Problem

[AgentPete]

Here's an important article that most writers, agents and other publishers need to read, link below.

Simon and Schuster is a successful publishing heavyweight. They’re not struggling, they don’t need a cash injection. And they’re a vital part of “the Big Five”, i.e.:

• Penguin Random House
• Macmillan
• Hachette Book Group
• HarperCollins
• Simon and Schuster

However, Simon and Schuster’s owners (Paramount Global) wanted to dispose of them – first to Penguin Random House, which was blocked by the US Department of Justice on monopoly grounds.

They’ve now been sold to private equity privateers Kohlberg Kravis Roberts.

This – and the likely $1bn of debt soon to be foisted on a formerly successful publisher – is likely to have a major effect on all of us – traditionally-published, self-published, aspiring, whatever.

Here’s the piece:

Book Publishing Has a Toys ‘R’ Us Problem

A private-equity acquisition will saddle Simon & Schuster with $1 billion in debt. What could go wrong?

www.theatlantic.com

 

[KateESal]

Jeez, the cynicism of it all makes my head spin.

Ugh.

 

[Hannah F]

Janey! Did Simon and Schuster not see this coming? Could they have just said no? And why is this kind of company-fleecing even legal?

 

[Jonny]

Scary stuff. Is nothing sacred when it comes to capitalist greed?.

"What price art?" say artists.
"As much we can make from it," replies Private Equity.
"And safeguarding of jobs and livelihoods? Not to mention the continued nurturing of writers and literature?"
"Well, you know... of course we're onboard with all that stuff. Except sometimes shit happens,."

 

[AgentPete]

Janey! Did Simon and Schuster not see this coming? Could they have just said no?

It has little to do with the management or workers there (although I'd love to have seen a management buyout) but rather the owners themselves, in this case Paramount.

And why is this kind of company-fleecing even legal?

Good question. It destroys value for most of us, creates vast wealth for a few.

 

[James Charles]

Here's an important article that most writers, agents and other publishers need to read, link below.

Simon and Schuster is a successful publishing heavyweight. They’re not struggling, they don’t need a cash injection. And they’re a vital part of “the Big Five”, i.e.:

• Penguin Random House
• Macmillan
• Hachette Book Group
• HarperCollins
• Simon and Schuster

However, Simon and Schuster’s owners (Paramount Global) wanted to dispose of them – first to Penguin Random House, which was blocked by the US Department of Justice on monopoly grounds.

They’ve now been sold to private equity privateers Kohlberg Kravis Roberts.

This – and the likely $1bn of debt soon to be foisted on a formerly successful publisher – is likely to have a major effect on all of us – traditionally-published, self-published, aspiring, whatever.

Here’s the piece:

Book Publishing Has a Toys ‘R’ Us Problem

A private-equity acquisition will saddle Simon & Schuster with $1 billion in debt. What could go wrong?

www.theatlantic.com

Yep. Love the image:

 

[PCFrontier]

I think this Sky News article gives a more honest report of the story. The bid can only go ahead if the US regulator/US Authorities approve it.

Publisher Simon & Schuster sold to private equity firm for £1.27bn

The sale of the publisher, which counts Stephen King and Britney Spears among its diverse portfolio of writers, comes after a US judge blocked a previous takeover attempt by rival Penguin Random House.

news.sky.com

A bit of balance. Private Equity firms often save companies from going bust, saving the business and the jobs which would otherwise disappear. They also provide start up money to new enterprises and business start ups that find it impossible to borrow money elsewhere, creating jobs and business. Kohlberg Kravis and Roberts has long term investments in 100's of companies - just check out their website.

Yes, when Private Equity firms borrow money to buy a large business and saddle that business with debt that it not good. That's down to the Government and/or regulators to stop or allow such cases.
Best wishes
Paul

 

[RK Wallis]

Are any of your authors affected @AgentPete? I hope not.

 

[Victoria Bastedo]

Here's an important article that most writers, agents and other publishers need to read, link below.

Simon and Schuster is a successful publishing heavyweight. They’re not struggling, they don’t need a cash injection. And they’re a vital part of “the Big Five”, i.e.:

• Penguin Random House
• Macmillan
• Hachette Book Group
• HarperCollins
• Simon and Schuster

However, Simon and Schuster’s owners (Paramount Global) wanted to dispose of them – first to Penguin Random House, which was blocked by the US Department of Justice on monopoly grounds.

They’ve now been sold to private equity privateers Kohlberg Kravis Roberts.

This – and the likely $1bn of debt soon to be foisted on a formerly successful publisher – is likely to have a major effect on all of us – traditionally-published, self-published, aspiring, whatever.

Here’s the piece:

Book Publishing Has a Toys ‘R’ Us Problem

A private-equity acquisition will saddle Simon & Schuster with $1 billion in debt. What could go wrong?

www.theatlantic.com

I'm ruffled that the private equity company is so obviously just interested in flipping it. They invest a little, make the bought company carry the big debt, pull a few fancy, flashy tricks to shine up the vehicle, and then sell at a profit. The company itself survives, I guess.

 

[AgentPete]

Are any of your authors affected @AgentPete? I hope not.

I think everyone’s going to be affected, hence my posting here.

In the short term, as the article suggests, there will be even more reduction in authors’ advances, royalties etc from S&S. This continues a trend that has seen many mid-list authors fall below minimum wage and have to either seek a second job or simply stop writing completely. I don’t know how that situation is going to help the publishing industry; it increasingly means that the only people able to write books on a full-time basis will be those with supplementary incomes, i.e. upper middle class. How does this add to our much-vaunted diversity? It’s one thing to “claim” to be interested in publishing diverse voices… it’s quite another to stump up the hard cash to pay for it. And from the readers’ pov, it will mean a narrower range of voices / viewpoints etc. In other words, a contraction of offerings.

Saddling S&S with massive unnecessary debt will likely result in their eventual downfall (a la Toys R Us). Publishing is pretty unpredictable; all it takes is a few bad bets or a few bad years and S&S will be on the block again, probably to be absorbed into one of the remaining Big Four. Make that Big Three if HC is also a disposal. At which point, it’s very hard for agents to get killer deals done, for lack of competitive buyers.

More generally, and this is where it indirectly affects self-published authors, it acts to reduce the book market generally. A rising tide floats all boats, so more books being sold to the public results in… more books being sold to the public, whether traditionally-published or self-pub. And the opposite applies. The issue here is really about the cultural relevance of books, as expressed by discretionary market share, but that’s probably another discussion.

 

[Pamela Jo]

And this article on Atlantic explains a lot. American business ie corporations have had the direct goal of undoing FDR's New Deal since Reagan was elected. It was bipartisan political effort. And so we are here. Kids should read about Reagan's reversal of antitrust legislation. suffocation of unions, junking of the solar panels on the White House installed by President Carter.

Biden Declares War on the Cult of Efficiency

New antitrust guidelines revive the old-fashioned idea that American life is about more than just buying lots of cheap stuff.

www.theatlantic.com

 

[Eva Ulian]

I think everyone’s going to be affected, hence my posting here.

In the short term, as the article suggests, there will be even more reduction in authors’ advances, royalties etc from S&S. This continues a trend that has seen many mid-list authors fall below minimum wage and have to either seek a second job or simply stop writing completely. I don’t know how that situation is going to help the publishing industry; it increasingly means that the only people able to write books on a full-time basis will be those with supplementary incomes, i.e. upper middle class. How does this add to our much-vaunted diversity? It’s one thing to “claim” to be interested in publishing diverse voices… it’s quite another to stump up the hard cash to pay for it. And from the readers’ pov, it will mean a narrower range of voices / viewpoints etc. In other words, a contraction of offerings.

Saddling S&S with massive unnecessary debt will likely result in their eventual downfall (a la Toys R Us). Publishing is pretty unpredictable; all it takes is a few bad bets or a few bad years and S&S will be on the block again, probably to be absorbed into one of the remaining Big Four. Make that Big Three if HC is also a disposal. At which point, it’s very hard for agents to get killer deals done, for lack of competitive buyers.

More generally, and this is where it indirectly affects self-published authors, it acts to reduce the book market generally. A rising tide floats all boats, so more books being sold to the public results in… more books being sold to the public, whether traditionally-published or self-pub. And the opposite applies. The issue here is really about the cultural relevance of books, as expressed by discretionary market share, but that’s probably another discussion.

Luckily, you are drawn by the Movie industry too...