Simon & Schuster, the publishing powerhouse behind best-selling authors like Stephen King, Ursula K. Le Guin and Judy Blume, is up for sale.
Its owner, ViacomCBS, announced Wednesday that, after a “strategic review,” the book publisher was no longer essential to its business and that it would seek a buyer.
“We will look to complete a transaction that maximizes its value once the market stabilizes,” Robert M. Bakish, the chief executive, wrote in a memo to employees, most of whom learned of the sale only Wednesday.
ViacomCBS, the newly combined business controlled by Shari Redstone, is betting its future on streaming and sports content. Owning a major book publisher does not fit into those plans.
A sale of Simon & Schuster, one of the five largest book publishers in the country, would shake up the publishing industry, which has become a winner-take-all business dominated by huge companies and brand-name authors.
A wave of consolidations has swept the book business in the last decade. In that series of moves, Penguin and Random House merged, Hachette Book Group acquired Perseus Books, and News Corp. bought romance publisher Harlequin.
Founded as a publisher of crossword puzzle books in 1924 by Richard L. Simon and M. Lincoln Schuster, Simon & Schuster expanded into a major house with 50 imprints, including Charles Scribner’s Sons, the publisher of 20th-century heavyweights like Ernest Hemingway, F. Scott Fitzgerald and Thomas Wolfe. The company now has 1,350 employees and publishes roughly 2,000 books a year. Notable Simon & Schuster authors include Annie Proulx, Bob Woodward, Walter Isaacson and Hillary Clinton.
In a note to employees Wednesday, the Simon & Schuster president and chief executive, Carolyn Reidy, sought to reassure the staff that the company was not in jeopardy. “Whatever the outcome, this process does not change what we know to be true of Simon & Schuster: We are a great publishing house and one of the world’s best known publishing brands, with an incredible legacy and bright future,” she wrote.
The company is going up for sale at an uncertain moment for publishers, who have struggled with lethargic sales and anxiety over the future of Barnes & Noble, the once-dominant chain that was bought last year by hedge fund Elliott Advisors.
“It hasn’t been a strong growth industry in a long time, and what little growth there has been recently seems to be arrested,” said Thad McIlroy, a publishing industry analyst.
Simon & Schuster also has several perennial bestsellers on its list, including Joseph Heller’s “Catch-22,” Margaret Mitchell’s “Gone With the Wind” and Dale Carnegie’s “How to Win Friends and Influence People.”
Still, with the rise of Amazon and e-books, the business has suffered. In 1989, one of its best years, the publisher generated $1.3 billion in sales. Last year, sales were $814 million. The company’s profits have also declined, hitting $143 million in 2019, a 6.5% drop from the previous year. Legacy media businesses can sell anywhere from five times to 10 times annual profits.
ViacomCBS is looking for $750 million in cost cuts after the December merger of Viacom and CBS. Viacom, the longtime owner of Paramount Pictures and cable networks like MTV and Comedy Central, absorbed the CBS broadcast network and Simon & Schuster as part of the deal.
The newly supersized company has taken a hit in the markets after a weak earnings performance for the three months that ended in December, and the combined business is now worth less than either business before the merger.
The potential sale of Simon & Schuster is part of a great unwinding taking place across the media industry as conglomerates cleave off or close down ancillary businesses. The spate of acquisitions in recent years — AT&T bought Time Warner, and The Walt Disney Co. absorbed the majority of Twenty-First Century Fox — has largely been a defensive measure against Big Tech and a bet on digital video as the future of entertainment.
Books won’t play a significant role in the coming skirmish, in Bakish’s view. Simon & Schuster is “not a core asset of the company; it is not video-based; it doesn’t have significant connectivity to our broader business,” he said at an investor conference Wednesday morning.
He went on to praise Simon & Schuster, even as he hung a For Sale sign on its door. “There’s no question that it’s a marquee asset,” Bakish said. “I’ve had multiple, unsolicited inbound calls.”