Simon & Schuster’s Non-public-Fairness Marriage Seems Good on Paper, however Will the Honeymoon Final?

Within the newspaper world, a sale to personal fairness tends to really feel like a funeral, with ink-stained wretches lamenting the gradual and painful loss of life of their trade. Within the adjoining world of guide publishing, the information this week that KKR would purchase Simon & Schuster from Paramount International hardly appeared so grim.

“Within the spring of 2023, we started a sequence of fascinating and stimulating conversations with members of KKR’s Media and Leisure trade staff about each facet of our enterprise, reflective of their eager curiosity in buying our firm. All of us from Simon & Schuster who participated got here away from these conversations impressed by KKR’s acumen, in addition to their staff’s need to assist our enterprise develop and thrive sooner or later,” S&S boss Jonathan Karp wrote in a company-wide electronic mail Monday afternoon, proper because the sale was introduced forward of Paramount International’s newest quarterly earnings name. “That dedication to progress is without doubt one of the causes I’m so glad KKR might be our subsequent proprietor.”

Karp, who is without doubt one of the most profitable individuals in publishing, has good motive to have fun on a private stage. If S&S had gone to, say, HarperCollins, it’s attainable he may need discovered himself the odd man out. In both case, after all Karp was going to convey an upbeat evaluation to his 1,600-plus employee bees, who’ve basically spent the previous two and a half years in limbo. It started in late 2020, when S&S’s father or mother firm—then often known as ViacomCBS—struck a deal for the writer to be bought to Penguin Random Home, the largest of the Large 5 publishers. The Biden administration challenged the deal, resulting in a protracted authorized battle between PRH and a consolidation-averse Division of Justice. The showdown culminated final fall when a federal decide dominated in favor of the DOJ, kiboshing the acquisition as soon as and for all and sending Paramount International again to the drafting board. On this sense, anybody employed by S&S might be simply relieved to lastly know who their new overlords are going to be.

Nonetheless, there’s motive to imagine that Karp’s glad discuss isn’t simply scorching air. Exhibit A: the involvement of Richard Sarnoff, who leads KKR’s media and leisure staff. Certain, Sarnoff’s undergraduate artwork historical past diploma from Princeton suggests he’s a cultured fellow and never just a few soulless finance shark. But it surely’s a special notch on his résumé that’s most germane to the matter at hand: Sarnoff himself is a former book-publishing govt, serving within the early 2000s as chief monetary officer of, sarcastically sufficient, Random Home. (He additionally chaired the Affiliation of American Publishers throughout that point.)

So far as I can inform, the person has a superb rep. Sources within the know described him as “very good,” a “nice man,” and a “guide individual.” Karp, who overlapped with Sarnoff at Random Home (the place Karp finally rose to editor in chief) was equally effusive in his firm observe: “I’ve recognized and admired…Richard Sarnoff for twenty years…. Richard understands the nuances of the guide enterprise in addition to anybody I do know.”

Sarnoff instructed the Related Press that no layoffs are deliberate, and in his personal boilerplate message concerning the sale, he declared, “We see a compelling alternative to assist Simon & Schuster turn into a good stronger associate to literary expertise by investing within the growth of the corporate’s capabilities and distribution networks throughout mediums and markets whereas sustaining its 99-year legacy of editorial independence.”

The icing on the cake is that the S&S crew will get an possession stake as soon as the sale closes. (And it is anticipated to shut this time, since KKR possession received’t elevate the type of antitrust alarms {that a} rival main writer would.) For context, as a part of KKR’s flip of the audiobook firm RBmedia, now being offloaded to the funding agency H.I.G. Capital, the common payout as soon as the ink dries is anticipated to be a yr’s pay or a minimal of $50,000. Right here’s Karp once more: “Of all the possible patrons we spoke to—and there have been a whole lot of them—KKR was the one one which mentioned its plans to assist Simon & Schuster in creating an fairness possession program to offer all of our staff with the chance to take part in the advantages of possession after the transaction closes.”