The Big Four

Simon and Penguin House

A predictive model is only as good as its results. That means a reliable way to assess the value of a business strategy is to look at the projections made by people who employ that strategy. If their predictions based on a given model consistently pan out, it's a good bet that their model corresponds to reality.

The newpub moment that hit the scene when Amazon introduced the Kindle offers a useful example of this dynamic. For more than a decade now, independent authors have evangelizing writers away from the old New York publishing houses with the promise of greener pastures on the indie side. Many of newpub's key arguments rely on the prediction that oldpub's decline would force a merger of the Big Five publishers into the Big Four.

Indie authors have anticipated the Big Five's demise for years. A common newpub meme likened oldpub to lumbering dinosaurs obliviously grazing as the asteroid approached. Those dinosaurs proved more resilient than everybody thought. But this year, the asteroid finally hit.

And now, the long-prophesied event has come to pass.

ViacomCBS Inc. (NASDAQ: VIAC, VIACA) today announced it has entered into a definitive agreement to sell the publishing business Simon & Schuster (“Simon & Schuster”) to Penguin Random House LLC (“Penguin Random House”), a wholly owned subsidiary of Bertelsmann SE & Co. KGaA, for $2.175 billion in cash.

This divesture follows a strategic review of non-core assets ViacomCBS undertook early in 2020. Proceeds from the transaction will be used to invest in ViacomCBS’s strategic growth priorities, including in streaming, as well as to fund the dividend and pay down debt.

This transaction is the outcome of a highly competitive auction that attracted interest from buyers around the world, reflecting Simon & Schuster’s position as one of the world’s best known publishing brands. Simon & Schuster has more than 30 publishing units across adult, children, audio and international. Its portfolio of best-selling authors includes Stephen King, Doris Kearns Goodwin and Jason Reynolds, and it owns a rich backlist of perennial favorite titles such as Catch-22 and The 7 Habits of Highly Effective People.

The transaction is expected to close in 2021, subject to customary closing conditions, including regulatory approvals. Upon close, Simon & Schuster will continue to be managed as a separate publishing unit under the Penguin Random House umbrella, and Jonathan Karp, President & CEO of Simon & Schuster, and Dennis Eulau, COO and CFO, will continue at the helm of the publishing house.

Cutting through the Madison Avenue marketing gloss reveals that ViacomCBS sold Simon & Schuster because they're deep in debt and their pet publisher isn't growing. Since newpub now has a majority share of the book market, it's no stretch to conclude that S&S has actually been contracting.

This press release also contains a nugget of information that the "Get woke, go broke" crowd missed all along. Pop Cult front companies don't go under when fans walk away because their Death Cult parent companies serve as multibillion-dollar safety nets. When a woke publisher, movie studio, or record label spills too much red ink on one megacorp's balance sheet, the parent company just swaps subsidiaries with another megacorp. It's a fiscal juggling act that makes sure the poz keeps flowing.

It also ensures that the parent companies' debts are never paid off. The enormous expense of keeping a dead business afloat does seem to put brakes on the megacorp gravy train. ViacomCBS is willing to lose a billion dollars shilling for Stephen King. But two billion? That's stretching plausible deniability.

What's significant about this deal is that ViacomCBS sold S&S to a fellow megacorp that already has its own publisher. In fact, that publisher is the result of a merger between two other publishing houses. That means the power players aren't just moving rooks around the board anymore. Pieces are being removed. A decade ago, there were six. Now there are five. Next year, there'll only be four.

That's exactly what the newpub oracles predicted--if not exactly when. It's easy to understand why their timetable was about five years off. Everybody thought of the Big Five as businesses out to make money, however ineptly. Nobody imagined back in 2014 that these companies are run by fanatical Death Cultists bent on destroying Christendom.

Simon & Schuster's merger with Penguin Random House confirms a core tenet of newpub. We can now be sure that the indie publishing model more closely aligns with reality than the oldpub model. The next test for newpub will come soon, since their follow up prediction is that the number and rate of oldpub mergers will increase. So far, those forecasts are right on track.

For more expert insights into oldpub's slow-motion collapse, see best seller Jon Del Arroz's video:

And for thrilling sci fi from an author dedicated to your entertainment, buy my new military mech adventure, Combat Frame XSeed: S!

Combat Frame XSeed: S - Brian Niemeier


  1. This brings to mind a scene from Citizen Kane: when the business people tell Kane that his foray into newspapers lost him a $1M (real money, back then), he smirks and says: at this rate, I'll be broke in 60 years.

    And that's just it: to a billionaire, losing a $100M or 3
    means nothing, especially since a) it's not in the businesses where his money is coming from, and, especially b) he's leverages his money so that only a small fraction of the losses in businesses he controls affect him directly.

    When there's one man in the room whose whims can make or break the careers and fortunes of all the other people in the room put together, he tends to get what he wants. Since what he seems most of all to crave is the approval of the powerful, he's as easily manipulated as any of the rabbits he holds in contempt.

    1. An apt analogy. Even Kane had to sell out to Thatcher in the end. It took an economic depression, though that's probably in the cards for us, as well.

  2. A lot of these companies SHOULD be making money. They have massive, massive back-catalogues and currently, access to nearly zero interest loans.
    From my perspective, one of the things to really watch is going to be inflationary pressure. That happens, interest rates start to come up. I can't really describe how catastrophic that will be to naive risk managers who say "low interest means it's a great time to borrow!".

    1. wreckage

      Yes if the employees and suits were rational businessmen. However as Brisn and others have tirelessly analyzed they're not. They're fanatical death cultists bent on destroying everything.

      Bertelsmann isn't in great shapeceither It's a huge company in Europe and Penguin is a main reason but the parent company is ailing.

      Here's Nate's take on the sale


    2. Making their money on the quality of the backlist, by printing the backlist so it could actually sell, would be admitting that everything recent is garbage.

    3. I think the back-catalogue is tax-disadvantaged, but that couldn't really be the problem, could it? I mean, avoiding a profit because muhh taxxxx is a rookie mistake, right?

  3. Isn't Penguin the publisher where a bunch of easily replaceable workers had a "town hall" to decide that the company publishing Jordon Peterson's latest work was the moral outrage of the century? Not that I'm a Peterson fan, but no place I ever worked gave a rats ass what I or my fellow workers thought about upper management decisions. If I didn't like it, the front door swung ways.

    1. Crisis.
      Yup it was the Canadian subsidiary. Lord the Karens' tears and emotional incontinence is both an affront and humourous.
      I'm fed up with the lack of fortitude.


  4. Everything is converging on a One World Corporation. Of all the apocalypse scenario's I never thought Wal-Mart would be the harbinger of the endtimes. Life really is stranger than fiction.

    I'm off of Twitter btw, I didn't get banned. I just needed to unplug and reassess the time I was spending hunched over my phone. Adam kind of have me a wake up call, tell him thanks when you see him.