ViacomCBS agrees to sell Simon & Schuster to Penguin Random House for more than $2B
Andy Serwer, Yahoo Finance’s Editor in Chief joins the Yahoo Finance panel to discuss the news that ViacomCBS has agreed to sell Simon & Schuster to Penguin Random House for more than $2 billion in a deal that will create the first megapublisher.
Video Transcript
ADAM SHAPIRO: Let's bring in editor-in-chief Andy Serwer to help us comprehend the truly historic nature of this $2 billion deal, selling Simon and Schuster Viacom CBS to Penguin Random House. I can't talk. I'm so tongue tied on $2 billion, Andy. But this is historic if it actually closes, right?
ANDY SERWER: Yeah, there's a lot of really interesting things going on here, Adam. First of all, as you said, Viacom CBS selling this to Penguin Random House, which is owned by the German media conglomerate Bertelsmann for almost $2.2 billion. And what's interesting here is that Viacom CEO Bob Bakish put this on the block in the spring. He was looking for $1.5 billion.
So how come he got so much more? I mean, books is a dead business, right? Not at all, not at all. Three things going on. One, COVID, the pandemic. Everyone's staying at home, got nothing to do. They're reading books. Two, Trump. All the pro-Trump books, all the anti-Trump books. And three, racial and social justice. A lot of books there, like, say, "Uncomfortable Conversations With a Black Man" by Emmanuel Acho.
The other thing is is that News Corp's HarperCollins wanted in on this deal big time. And CEO Robert Thompson-- apparently, they're left out-- he's saying, where is the DOJ here? Because when you put together Penguin Random House and Simon and Schuster, a lot of market share, Adam.
SEANA SMITH: Yeah, Adam, I wanted-- or sorry, Andy, I wanted to ask you about that, just in terms of some of these anti-trust concerns. Because we also heard that Authors Guild came out with the statement they're opposed to this sale, saying that the Justice Department, they want them to challenge this deal. When we take a look at what exactly could be at play, I mean, what are the biggest concerns about this? Just sheer size?
ANDY SERWER: Yeah, I mean, it's the market power. I mean, you're combining number one and number three here, Seana. And HarperCollins is number two. And you're going to have over 50% market share with the combined companies owned by a German company. You know, this might be something the Trump White House or Trump DOJ would look askance at. Maybe any Justice Department would.
And it's so interesting because, you know, who really has the power here? Is it these publishers, or is it really just Amazon anyway? So, so much has changed, but, you know, you look at the authors. I mean, it's just all the biggies are, you know, with these. Everyone from Grisham to Dan Brown, Barack Obama, you know, Matthew McConaughey, you know, "The Green Lights," that new book.
And it's interesting. You know, it's such a profitable business. I mean, if you're a thought leader, you guys, think about it. You just write down your thoughts. What's the cost? It goes out. Yeah, you're not selling it for $26 a pop anymore. You're selling them for $15 a pop. But still, the margins, if you hit, are still incredible.
ADAM SHAPIRO: Andy, would those DOJ antitrust issues have more weight in a world where there was a Borders and a Walden books and all of that? Because it doesn't-- that-- they can't use that leverage to then market their product. I mean, you go to Amazon, you can get whatever you want.
ANDY SERWER: Yeah, that's what I was sort of alluding to, Adam. I mean, in other words, who really does have the power here at this point? And still, like, Barack Obama, by the way, an author like that has a lot of leverage himself, right? On the other hand, I guess if there's two places to go to market, which is to say HarperCollins and this new behemoth, you know, it's like, well, it's less of an auction.
And it's interesting, of course, Amazon itself is not in the business of directly publishing because they know they couldn't get away with that in terms of getting-- passing muster with the DOJ. But you're right. It's going to be very interesting to watch the Justice Department respond to this proposed deal. Very, very interesting indeed.
ADAM SHAPIRO: And who has said Walden Books in the last 20 years? I did it myself. Andy Sewer, our editor-in-chief, thank you very much.
