After the merger with Penguin was rejected (rightly), a private equity firm has bought them. It will be sad to see such a long time company that brought me lots of joy in reading get looted into oblivion by vultures.
Is it clear that this is what will happen? None of the news stories I’ve heard suggested that this was the case. Why throw out one of the very few remaining book publishers in the country?
Some articles:
Paywalled New York Times and Washington Post:
https://www.nytimes.com/2023/08/07/books/booksupdate/paramount-simon-and-schuster-kkr-sale.html
Remember private equity has had a very negative impact on newspapers. I would guess the biggest concern would be that Simon & Schuster would increase its emphasis on blockbusters and quit publishing culturally important, but not profitable books. And note a number of firms bought by private equity have been loaded up with so much debt that they become unprofitable and go out of business (for example Toys R Us).
Toys R Us was in fact destroyed and looted by the same KKR that has now acquired Simon & Schuster.
I would not be optimistic about the publisher’s future.
Can someone explain why one would buy a company and destroy it? What’s the point? Does it make sense business-wise, or are they just…bad businessmen? Like they’re playing Monopoly, but badly? “Look, I own all these companies!” “But they’re all broke or hemorrhaging cash.”
The point is to make money. Whether the company survives isn’t relevant.
…to make lots and lots and lots and lots and lots and lots and lots of money.
How? Volume? T’RU went bankrupt. Taking a company making money and having it lose money until there’s none left doesn’t seem like a way to “make money”. I guess I’m not a genius billionaire. That’s why I asked.
Yes, but the assets of T’RU were looted and sold, making money for the investors. What was left went bankrupt, and all the debts went poof, but the money was already gone.
Thanks.
It seems like it wouldn’t work in the long term (eventually, no one will be willing to lend money, or the bankruptcy insurance will stop insuring, or the government will stop bailing them out. Someone has to be losing money in this process), but, here we are.
…it doesn’t need to work in the long-term. It needs to work long enough that all of the vultures can make their money, then move on. It isn’t sustainable. It isn’t logical. It doesn’t make any sense. They don’t care.
…and the other thing to note is how effective the propaganda is around all of these things. Many people are still convinced that Toys R Us failed because they “didn’t adapt with the times” and not that it was “loaded with debt and stripped for parts.” And the same will happen when Simon & Schuster inevitably destructs.
I’d feel a bit more angst over Simon & Schuster’s potential fate if it wasn’t guilty of encouraging terrible anti-science books.
S&S has a warehousing and distribution deal with Skyhorse Publishing, which has a sizable catalog of antivaccine books, including one aimed at kids titled “I’m Unvaccinated And That’s OK!”. Simon and Shuster caught hell earlier this year for distributing an HIV/AIDS denialist book.
If S&S goes down, Skyhorse will have to find another enabler.
Small irrelevant note; the Simon of Simon & Schuster was singer Carly SImon’s father.
For another recent example, Instant Pot was a good manufacturer with an excellent popular product when it was bought by a private equity firm in 2019.
Now it’s bankrupt and dead.
I don’t think IP fits the model exactly. They had one basic product with a small number of add ons. Nearly everyone who wanted one bought one, mainly in a bubble, and they tried but couldn’t innovate any new products.
At least it’s not the arsehole who ruined Sears.
Maybe someone could introduce KKR to a hooker with a heart of gold.
IP was doing fine until the PE firm insisted on growth.