The two top-ranking executives at Simon & Schuster insisted last week that the proposed merger of its parent company, Viacom, with CBS will have little effect on the publisher. Jon Newcomb, who remains chairman and CEO of S&S, told PW that there is "no reason for us to change the direction or strategy of our publishing program." Jack Romanos, president and chief operating officer, said that since the sale of S&S's educational and professional divisions, the company has "always assumed that we would be a stand-alone operation within Viacom and we will continue to go forward on that premise."
Romanos said that the merger would "expand the universe" of properties with which S&S could develop publishing deals. In the past, Romanos has said that about $40 million of S&S's revenues can be traced to projects that the company has done with other Viacom operations; the addition of CBS will give S&S more content partners, Romanos noted. "We expect to continue to be part of the Viacom family," he said. But S&S's ranking in that family will be reduced; S&S currently represents about 4.7% of Viacom's total revenues, a figure that will fall to 2.4% after the merger.
Despite the public positions taken by Newcomb and Romanos, there was widespread speculation throughout the industry that, in the words of one investment banker, "it's not a question of if Simon & Schuster is sold, but when."
That feeling was ech d in the agent community. Vicky Bijur, who heads her own agency and recently took over as president of the Association of Authors' Representatives, said she assumes most agents "are in a state of suspense about S&S's future and are eager to see if Viacom will hold on to its publishing arm." Marcy Posner, an agent with the William Morris Agency, was more blunt: "Everyone I've talked to thinks S&S will be sold." Neither Bijur nor Posner, however, said they would stop submitting manuscripts to S&S.
A major reason many feel that S&S will eventually be sold is that CBS chairman Mel Karmazin, who will be in charge of the day-to-day operations of Viacom as president and COO, has no publishing background and is highly focused on increasing the company's advertising revenues. At the press conference announcing the merger, Karmazin said the combined companies "will become a global advertising powerhouse." Furthermore, after the deal closes, Viacom deputy chairmen Philippe Dauman and Tom Dooley will leave the company. Both men had been supporters of retaining S&S within Viacom. And as one publishing veteran observed, "CBS got out of the publishing business once before and I can't see them staying in it now." In 1985 CBS sold Henry Holt to Holtzbrinck and, a year later, sold its educational and professional divisions to Harcourt Brace Jovanovich.
On the other hand, the CBS-Viacom deal may actually prolong S&S's stay as part of Viacom rather than speeding its departure. No deal will be done until after the merger is completed, which is not expected to occur until early 2000. But if S&S is put on the block, analysts see a large number of possible buyers for the company, despite warnings from Wall Street that trade publishing margins are too small.
HarperCollins was mentioned by most analysts as a potential buyer, and one analyst observed that if Time Warner or Holtzbrinck are serious about becoming bigger players in the trade market, the purchase of S&S would give them their best chance. Some intriguing dark horses include Torstar, whose Harlequin subsidiary has had a long history with S&S, and Reader's Digest, which is currently reinventing itself. And while a possible deal is still months, if not years, away, one publishing pundit predicted: "The future of Simon & Schuster will be the talk of Frankfurt."
