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Pearson books $4.6B deal
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May 18, 1998: 8:10 a.m. ET
London publisher buys Simon & Schuster's education, reference units
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NEW YORK (CNNfn) - Turning a new page in the global publishing business, Viacom Inc. has agreed to sell Simon & Schuster's educational and reference publishing units to Britain's Pearson Plc in a $4.6 billion deal that solidifies Pearson's market niche in instructional texts.
Under a pact signed Sunday, Pearson will, in turn, sell the reference operation to the Texas buyout firm, Hicks, Muse, Tate & Furst for $1 billion.
Viacom said it expects to realize $3.8 billion after taxes following the deal's targeted completion, sometime in this year's third quarter. The company said it plans to use the money to reduce debt.
Viacom views the deal as a way of zooming in on the mass market entertainment imprints that have catapulted the New York firm to the top echelons of the entertainment and publishing business.
Viacom's operations include Blockbuster, MTV Networks, Paramount Pictures, Paramount Television, Paramount Parks, Showtime Networks, Simon & Schuster, television stations and movie screens in 12 countries.
In 1997, Viacom's publishing lines released 56 best-selling titles, including Frank McCourt's Pulitzer-prize winning autobiography, Angela's Ashes, published under Viacom's Scribner imprint.
"This is an extremely significant step in our strategic goal to become an entertainment-driven enterprise with a strong balance sheet and significant free cash flow," said Viacom's chairman, Sumner Redstone.
Global trends in publishing
For Pearson, the deal continues a recent series of acquisitions of educational-oriented publishers. Pearson, owner of London's Financial Times newspaper and a 50 percent stakeholder in The Economist Group, is also the parent company of Addison Wesley Longman, a global educational publisher.
In acquiring the Simon & Schuster educational unit, Pearson furthers global consolidation trends in the publishing business.
Spearheading that drive, German conglomerate Bertelsmann AG announced to much fanfare in March its plans to acquire Advance Publications Inc.'s Random House unit. In 1996, Pearson itself bought out Putnam Berkeley, and subsequently merged it into its Penguin Publishing Group.
Marjorie Scardino, Pearson's chief executive officer, said in a statement that the S&S unit, when combined with Addison Wesley, would create "an international education business of unbeatable quality."
Viacom's (VIA) Class-A shares ended up 1/8 at 58 Friday on the American Stock Exchange.
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