Here we go again!
HarperCollins parent company News Corp. has "expressed interest" in acquiring Simon & Schuster from its parent company, CBS Corp, according to the Wall Street Journal (a News Corp. newspaper), which cited the usual "people familiar with the talks." The discussion is "preliminary," and a deal is "not imminent," the sources said.
The move comes just three weeks after the Random House-Penguin Group merger, which was announced just before News Corp. was going to make an offer to buy Penguin, according to News Corp.'s Times of London. After a flurry of rumors, the Random House-Penguin merger was confirmed by owners Bertelsmann and Pearson only four days before the deal was completed.
News Corp. is in the process of splitting into two companies, one that consists of the "entertainment" parts of News Corp., including Twentieth Century-Fox and Fox News, and the other that consists of the print side of the business, including HarperCollins and a range of newspapers such as the Wall Street Journal and the Times. The Journal said that the new print publishing company "is expected to have a significant amount of cash on its balance sheet, potentially to be used for acquisitions." At its current size, HarperCollins would account for more than a fifth of the new company's business.
After a period of quiet because of the U.K. phone-hacking and bribery scandal involving top News Corp. executives, the company is again making acquisitions. Yesterday it announced that it is buying 49% of the YES Network, which broadcasts New York Yankees games.
Founded in 1924 by Richard L. Simon and M. Lincoln "Max" Schuster, S&S had several corporate owners before being bought by Viacom in 1994. In 2005, Viacom morphed into two companies, one of which is CBS Corp., S&S's current owner. CBS's majority shareholder is National Amusements, Inc., a privately owned theater company headed by Sumner Redstone, who built Viacom (and the current CBS) into an international media company.
While there has been no official comment yet on the story, on November 8, after the Random House-Penguin merger was announced, CBS president and CEO Leslie Moonves appeared on Wall Street Journal Live, where in the course of a long interview, he was asked "how much money would it take for you to part with" Simon & Schuster.
He responded: "We would never put a price on it. If somebody came to us with a big offer, we'd obviously have to listen. But it's not something we're planning on doing." He then said that despite rapid change in book publishing, business and profits remain very strong. A few minutes later, asked again about an offer, Moonves mentioned News Corp. chairman and CEO Rupert Murdoch's reported interest in buying Penguin, adding, "If Mr. Murdoch called, I'd always be interested in what he had to say."
Simon & Schuster's sales are about $1.6 billion. According to the Journal, with about 20% of the book publishing market, a HarperCollins-S&S combo would become the second-largest publisher next to Random House-Penguin, which has nearly a 30% share.
If a HarperCollins-S&S deal is made, in a matter of a month the Big Six publishers would become the Big Four, including also Hachette and Macmillan. Most observers attribute the consolidation, after a long period of consolidation calm, to the effects of the digital revolution on traditional book publishing and the power and willingness of Amazon to battle publishers.