[fjtorres]

Originally Posted by Dazrin

I've seen a couple articles today about a possible sale of Simon and Schuster to Bertelsmann AG - owner's if Penguin Random House.

No possible about it.
It is a done deal.
$2.17B for a company grossing $835M a year and $143M net.

https://www.vanityfair.com/news/2020...-except-itself

In the latest 12 months for which financial information is available, S&S had revenue of $864 million, compared to $814 million in revenue for 2019, and OIBDA of $149 million, a modest 4.2% increase above the $143 million in OIBDA S&S had in 2019.

The pandemic sort-of helped.

The publishing establishment is making a BIG DEAL about it but frankly, it's rather, meh. Expected and insignificant in the full context, despite the handwringing and usual "Blame Amazon".


Details?

The WSJ has some (paywalled):

https://www.wsj.com/articles/penguin...hare_permalink

Publishing Perspectives:

https://publishingperspectives.com/2...2-175-billion/

And the Atlantic thinks it's Amazon's fault:

https://www.theatlantic.com/ideas/ar...amazon/617209/

For proper context:

https://variety.com/2020/biz/news/vi...le-1203523803/

ViacomCBS CEO Bob Bakish told investors Wednesday that the company is taking a hard look at all operations. Simon & Schuster has generated inquiries from prospective buyers in the past, Bakish said during a Q&A held as part of Morgan Stanley’s annual investor conference in San Francisco.

Simon & Schuster “is not a core asset. It is not video-based. It does not have significant connection for our broader business,” Bakish said. “We have had multiple unsolicited inbound calls about that asset, and so as the market stabilizes, we are going to engage in a process” to examine strategic alternatives. ViacomCBS said publishing revenue in 2019 came to $814 million, down 1.3% from $825 million in the prior year.

And slightly old (2018) but succint:

https://start.askwonder.com/insights...book-amtmjvosa

Total US Publishing Market

The total publishing market revenue in the United States is estimated to be approximately $25.82 billion.

Top Publishers in the United States

The top five publishing companies in the United States by revenue are Penguin Random House, Hachette Livre, Harper Collins, Macmillan Publishers, and Simon & Schuster, in that order.

• Penguin Random House has an annual revenue of $3.3 billion, accounting for approximately 12.7% of the total US publishing market (3.3 billion/25.82 billion).
• Hachette Livre has an annual revenue of $2.7 billion, accounting for approximately 10.4% of the total US publishing market (2.7 billion/25.82 billion).
• Harper Collins has an annual revenue of $1.5 billion, accounting for approximately 5.8% of the total US publishing market (1.5 billion/25.82 billion).
• Macmillan Publishers has an annual revenue of $1.4 billion, accounting for approximately 5.4% of the total US publishing market (1.4 billion/25.82 billion).
• Simon & Schuster has an annual revenue of $830 million, accounting for approximately 3.2% of the total US publishing market (830 million/25.82 billion).

There's other reports out there, with the total size of US publishing ranging from $28B-31B depending on what gets included, textbooks, catalogs, repair manuals, etc. What doesn't vary is randy Penguin at under $4B and S&S under $850M. So no matter what numbers you use, the merged company will be under 20% of US publishing. And less than 1% of the total US entertainment sector's $700B.

If anybody thinks the feds will even blink at this merger, they must live in NYC.

As for Amazon having anything to do with CBSViacom ditching S&S, that is laughable.

From the WSJ above:

ViacomCBS put Simon & Schuster up for sale in March, saying it would use the cash proceeds to further invest in its streaming-video efforts. Viacom Inc. and CBS Corp. completed their merger in December 2019. The company earlier this year agreed to sell CNET Media Group for $500 million and is looking to sell “Black Rock,” CBS’s historic Midtown Manhattan headquarters.

The merger of CBS and Viacom took two operations that were independently valued at $38 billion in 2019 and produced a debt-ridden chimera valued at $18B today.

Here is Forbes, last august:

https://www.forbes.com/sites/noahkir...h=571db57c7b09

“The merger was a huge mistake,” says Craig Huber, of Huber Research Partners. “They should have sold Viacom many years ago, rather than saddle CBS with it.”

The combined businesses issued their first report card in February, delivering a loss from continued operations of $273 million on revenue of $6.9 billion, a 3% drop over the prior year. They’ve also lagged behind their peers in launching a subscription streaming service that could compete with Disney+, Netflix, Hulu, NBCUniversal’s Peacock and Warner Media’s HBO Max.

Future reports were not expected to be much better even before coronavirus lockdowns put a freeze on entertainment and sports businesses. Then came the cancellation of the NCAA’s March Madness basketball tournament and with it ad revenue of more than $1 billion, which would have been divided between the two rights holders, CBS and Turner.

“The underlying problem here is that, despite $28 billion in revenues, the company generates a paltry amount of free cash flow,” the research firm MoffettNathanson wrote in a report published March 27. “It is mind-boggling to figure out where the cash flow is actually.”

It’s not likely to be found soon. The Paramount film studio can’t make movies right now, nor can it collect revenue from showing those that it has produced since theaters are largely closed. Furthermore, veteran media analyst Harold Vogel wrote last week that the company’s $18.7 billion of debt at year-end was “too high for comfort,” with $800 million of it coming due in the next year. “Cash flow in support of this debt is a relative trickle of what it ought to be at this stage,” he wrote.

Pressure is mounting for management to act. The problem is there are few good options.

ViacomCBS shares plummeted 18% the day after the February earnings report came out and have fallen another 48% since. Valued at about $25 billion after the merger, the combined businesses are now trading at a market capitalization of less than $10 billion. There are plans underway to sell off its book publishing arm, Simon & Schuster, but many are advocating the sale of far larger assets, like Showtime Networks or Paramount (whose titles include Top Gun, Mission Impossible and Star Trek), to shore up its balance sheet.

Any of that have anything to do with Amazon?
Or books?

I will concede that Bertlesmann paying $2.17B to outbid the Murdocks' Harper Collins (overpaying $700M) "might" in *their* mind somehow have something to do with Amazon, but if so they are deluded. Because the difference between a randy Penguin making up $2B of Amazon's book business and $2.4B isn't going to mean much to an Amazon moving $300B in merchandise.

Like it or not, books are not that important. To Amazon, to the DOJ, to the world at large. To us, maybe, but not to the outside world.

Of course, the people getting pink-slipped and the authors faced with one less bidder aren't going to be happy but that's life in a declining business. And tbey've all had six months warning.

The real impact of this deal is ViacomCBS ditching dead weight and reducing its debt to better compete in the much bigger sea of oline video. Which, given its low valuation and big video archives, makes them a juicy takeover for anybody looking for a big video archive to support their subscription service. Netflix, Apple, and yes, Amazon. Or a corporate raider.

This is but the appetizer.