Penguin S&S Random House?

[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.

https://www.msn.com/en-us/money/comp...nn/ar-BB1bk1xF

It feels like consolidation is happening faster and faster.

Looks like S&S being shopped around was first mentioned here: https://www.mobileread.com/forums/sh...d.php?t=327827

[binaryhermit]

At what point do antitrust regulators start to object to consolidation like this?

(I'd argue the rise in non-big5 publishers that ebooks help enable might actually be beneficial to this merger's chances)

[bookmarked]

So will they call the company PenguinS & Random HouseS?

[Uncle Robin]

SS Random Penguin sounds like a cool name for a Publishing House, a sinking ship whose world is threatened by change, like real penguins'

[Quoth]

Originally Posted by binaryhermit

At what point do antitrust regulators start to object to consolidation like this?

(I'd argue the rise in non-big5 publishers that ebooks help enable might actually be beneficial to this merger's chances)

And there is Amazon. Who will destroy everyone else. Their Audiobook system Audible is now a lending library that pays nothing to Authors. Did any regulators stop Amazon buying MobiPocket, various publishers, the two companies that they merged to make CreateSpace, IMDB, Goodreads, Abe Books, Book Depositary, an alternate eink display rights, KDP Select, Kindle Unlimited and Prime which are anticompetitive and cheat content providers?

The takeover / merger should go ahead.

The resulting outfit needs to wakeup!

• Cut out wholesalers, supply bookshops direct.
• Sell eBooks direct from their own website.
• Abandon DRM on ebooks.
• Use POD so NOTHING goes out of print.
• Have their own Audiobooks, sales and streaming from own site.
• Offer cassettes as well as Digital Audiobooks.
• Offer same price to bookshops as supermarkets.
• Keep different sizes in print via POD after print run.
• Launch some titles as POD and ebook only if unsure.
• Choose content on merit, not 3rd party snob literature reviewers or by some strange diversity criteria.
• Rely less on Agents.

[pdurrant]

Given the way they just amalgamate names, surely they'll become "Penguin, Random, House, Simon and Schuster". Also a great name for a law firm.

[Quoth]

Originally Posted by pdurrant

"Penguin, Random, House, Simon and Schuster". Also a great name for a law firm.

One of those needs to be repeated and House dropped. But yes!

https://edition.cnn.com/2020/11/25/m...use/index.html

At least it's neither Corona or Election or Brexit news.
Brexit is now facing a Wurst Kase scenario.

[JSWolf]

The best name for a law firm is Dewey, Cheatem, Andhow.

[issybird]

Originally Posted by Quoth

And there is Amazon. Who will destroy everyone else. Their Audiobook system Audible is now a lending library that pays nothing to Authors. Did any regulators stop Amazon buying MobiPocket, various publishers, the two companies that they merged to make CreateSpace, IMDB, Goodreads, Abe Books, Book Depositary, an alternate eink display rights, KDP Select, Kindle Unlimited and Prime which are anticompetitive and cheat content providers?

The takeover / merger should go ahead.

The resulting outfit needs to wakeup!

• Cut out wholesalers, supply bookshops direct.
• Sell eBooks direct from their own website.
• Abandon DRM on ebooks.
• Use POD so NOTHING goes out of print.
• Have their own Audiobooks, sales and streaming from own site.
• Offer cassettes as well as Digital Audiobooks.
• Offer same price to bookshops as supermarkets.
• Keep different sizes in print via POD after print run.
• Launch some titles as POD and ebook only if unsure.
• Choose content on merit, not 3rd party snob literature reviewers or by some strange diversity criteria.
• Rely less on Agents.

A few random comments:

• The absolute last thing I want as a customer is to have to visit each publisher’s website to download content. I’ll take direct download to a single device or app from a storefront that sells all publishers, thank you very much.
  
• I have no issue with DRM. I figure it works to an extent, as in better than nothing.
  
• Authors are paid for audio rights. That it’s not necessarily a royalty system doesn’t equal theft.
  
• Cassettes? Seriously?
  
• Books are selected on the basis of expected profitability. The serious issue resulting from consolidation is that publishers are increasingly unwilling to subsidize quality or prestige books from the profits on bestsellers.
  
• Agents are not the big evil. Anecdote: I once read the slushpile at Random House for a few weeks. Taking that in-house is not going to improve matters.

[leebase]

I think the Audible reference was in regard to Audible's return policy....which some authors think is overly generous to the customers. ie, they can listen to the book and still get their money back.

Amazon says they monitor for abuse behavior. But, Amazon is changing their policy to pay the author if a book is returned after more than a week.

[issybird]

Originally Posted by leebase

I think the Audible reference was in regard to Audible's return policy....which some authors think is overly generous to the customers. ie, they can listen to the book and still get their money back.

Amazon says they monitor for abuse behavior. But, Amazon is changing their policy to pay the author if a book is returned after more than a week.

That aspect escaped me, but it’s still a head-scratcher. Amazon lets you return ebooks for a week which would still allow for reading first. For that matter, you can return a paper book to a bookseller so long as you’re reasonably careful while reading. Or sit in B&N and read it on the spot.

[Sirtel]

Originally Posted by issybird

A few random comments:

• The absolute last thing I want as a customer is to have to visit each publisher’s website to download content.

This as well. I have no issue with visiting a couple of different stores regularly, but to go and browse any more sites every month to learn what's been released, no, thank you. No time for that. Besides, if those publishers start to insist on only reading their books in the app and disable downloads altogether, like HarperCollins does now, that would be far worse evil than Amazon.

[binaryhermit]

Given the snarky nickname that the Penguin/Random House merger, I'm gonna go with "Simon the Randy Penguin" for the new company.

[SteveEisenberg]

Originally Posted by issybird

The serious issue resulting from consolidation is that publishers are increasingly unwilling to subsidize quality or prestige books from the profits on bestsellers.

What titles might fit in a category of being unprofitable prestige books?

I am quite satisfied with the artistic quality of the books I now read from Random House and S&S, so I can’t see an upside to further consolidation.

[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.