Nearly three years after it was put up for sale by its parent company, Simon & Schuster is back at square one—wondering who its new owner will be. That is the position the nation’s third-largest trade publisher finds itself in after Paramount Global chose not to extend the $2.175 billion sales agreement it had signed with Penguin Random House in November 2020, which was set to expire November 21.

The decision ended any chance PRH would have had to appeal federal judge Florence Pan’s October ruling blocking the deal on antitrust grounds. According to the sales agreement, PRH could only appeal with the agreement of Paramount; with the deal now dead, Paramount will receive a $200 million termination fee.

In a statement, PRH said it was confident it could have made “a compelling and persuasive argument to reverse the lower court ruling on appeal,” but that “we have to accept Paramount’s decision not to move forward.”

In a note to S&S employees, CEO Jonathan Karp wrote, “At this point I have no specific information to impart about what will happen in the coming months.”

Paramount, which has made no secret of the fact that S&S doesn’t fit with its long-range plans, indicated it intends to try to sell the publisher again. In its 8-K filing with the SEC, it said S&S remains a “non-core asset,” and that while it is “a highly valuable business,” the publisher is “not video-based and therefore does not fit strategically within Paramount’s broader portfolio.”

The Authors Guild, which had steadfastly opposed the merger, welcomed the news and hoped that the decision would put an end to more consolidation in the industry—a point that CEO Mary Rasenberger emphasized in a statement. “We will oppose any mergers among the Big 5 in the future,” she wrote. “As the court’s analysis in the PRH lawsuit makes clear, the market for anticipated top-selling books is already highly concentrated, and five ‘big’ publishers is already too few.”

Pan’s decision to block the PRH-S&S deal was based largely on the fact that the combined companies would sign an estimated 49% of all deals for anticipated top-selling books—defined as books bought for advances of $250,000 or more each—with PRH already having a 37% share and S&S a 12% share. In the guild’s view, a purchase of S&S by another Big Five publisher should bring further antitrust scrutiny.

Executives at HarperCollins and Hachette Book Group said during the trial that they would be interested in buying S&S if the PRH purchase didn’t go through, but given Pan’s decision, both deals would certainly undergo an intense review by the Department of Justice—particularly if HC were the buyer, since it already has a 25% share of the anticipated-top-selling-books market. An acquisition by HBG, which has an 11% share, would have a better chance of government approval.

Given those antitrust concerns, it is unlikely that any prospective S&S buyer could match the $2.17 billion offer Paramount received from PRH. With no U.S. trade publisher aside from HC having the wherewithal to buy S&S, international publishers, private equity firms, and billionaires (one M&A executive joked that Jeff Bezos might be interested) are seen as potential bidders.

But one reason PRH was able to make such a high bid (early estimates put a sale price of S&S at between $1.2 billion and $1.7 billion) was because it had the ability to find huge costs savings from a merger—an ability other bidders will lack. During the trial, it was disclosed that PRH was expecting to achieve cost savings of $81 million by integrating S&S.

Another factor that could depress the sales price is the state of the trade publishing market. After two years of surprisingly strong growth, sales will likely be down this year from 2021, and with rising costs, profits are also under pressure.

On the positive side for Paramount, S&S is having another strong year. For the first nine months of 2022, sales were up 19% over 2021, to $863 million, and earnings increased 29%, to $223 million.

While it remains to be seen who will emerge as bidders, the Authors Guild, and many others in the industry, know who they don’t want to buy S&S: “A healthy publishing ecosystem is one that has many publishers with different tastes, interests and degrees of risk willing to assume. The bigger any of the Big 5 are, the harder it is for the smaller and newer publishers to compete,” Rasenberger’s statement concluded.