When a private equity firm acquires a company, it's only a matter of time before it looks to sell that company at a profit. But in an interview on Bloomberg Television this week, Pete Stavros, co-head of global equity for KKR, said that the firm is in “no hurry” to sell Simon & Schuster, which it bought last October.
Stavros noted that KKR’s philosophy in selling a company is that “it takes as long as it takes,” and gave a ballpark estimate of five to seven years before it looks for a new home for S&S. (KKR owned audiobook publisher RBmedia for five years, during which time RBmedia made a host of acquisitions, doubling the value of the company before it was sold last year.) In addition to eventually seeking a new buyer, Stavros didn’t rule out the possibility of taking S&S public through an initial public offering.
One reason for the slow approach, Stavros said, is that there are a number of things he would like to do to make S&S more valuable in the interim. Under Paramount Global, S&S was an “unloved gem” Stavros said—and unlike Paramount, which invested little into the publisher, S&S has KKR’s full backing to invest for growth.
Stavros was joined in the interview by S&S CEO Jonathan Karp, and both said that they see audiobooks as a major opportunity, especially with Spotify's entry into the market. Karp said that Spotify brings a different audience to audio than Audible and Apple, and noted that Britney Spears’s memoir, The Woman in Me, sold more than one million copies in audio and “broke records” at Spotify. Other growth opportunities Karp sees are expanding S&S’s efforts to reach the Latino market in the U.S., increasing its distribution business both in the U.S. and abroad, deepening its sci-fi and fantasy lists, and publishing more business books internationally.
With its barebones approach, S&S has been one of the most profitable large publishers of late, and Stavros hinted at ways that S&S may become even more productive. He added that KKR and S&S are looking into doing “a little more science” to predict which books will sell, while also finding ways to improve the supply chain and reduce returns.
KKR has received lots of attention for its policy of enabling employees of the companies it acquires to get ownership stakes, something it is offering to the S&S staff. Stavros said that he hopes the plan will attract top editors, who, he said, would make S&S “the destination of choice for authors.” Karp said that the ownership plan has “really energized the company” and has already allowed S&S to bring in new talent.
On the subject of AI, Stavros said that it could be a tool to make editors and authors more productive, but stressed that S&S has no plans to use it to write books. Echoing many inside and outside of publishing, he noted that, with so many unknowns about the technology, it is too soon to tell how AI will play out.