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Viacom to sell book unit
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January 14, 1998: 6:17 p.m. ET
Most of Simon & Shuster likely to fetch about $4 billion in proceeds
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NEW YORK (CNNfn) - Viacom Inc. on Wednesday announced plans to sell most of the assets of Simon & Schuster, a move which could allow the entertainment giant to substantially reduce its debt load.
The company said it will sell its educational, professional and reference publishing operations but will retain its consumer operations.
Industry analysts said the book units could fetch as much as $4.5 billion. After taxes, the sale could allow Viacom to slash its debt to $5.5 billion from around $8 billion now.
Viacom said it retained Morgan Stanley & Co. Inc. to evaluate the assets and find a buyer. The company said it hopes to announce the result of the sale process in the second quarter of 1998.
"We have made a strategic decision that the future of Viacom lies in maximizing the value and potential of our core entertainment assets," Sumner Redstone, chairman and chief executive of Viacom said in a statement. "The sale of our education, professional and reference publishing businesses will further refine that focus on software-driven entertainment, unlock the substantial value of these undervalued publishing assets for our shareholders and dramatically improve our capital structure."
"From the indications of interest that we have already received, it is clear that these unique assets have significant value for companies oriented to the educational, professional and reference markets," he added. "Our educational operations, in particular, are poised to benefit significantly from the unprecedented convergence of technology and traditional print curricula, a combination that has already begun to revolutionize the classroom."
Viacom's consumer publishing unit, which it plans to retain, has been responsible for works such as Diana: Her True Story -- In Her Own Words, by Andrew Morton.
Although Simon & Schuster is profitable, analysts have worried that its growth prospects are less attractive than the potential of Viacom's entertainment businesses.
Stuart Rossmiller of Deutsche Morgan Grenfell said that Simon & Shuster's textbook division alone is a crucial cash-producing unit for debt-burdened Viacom, a sentiment echoed by sources within the division.
Redstone said that Viacom will be keeping Simon & Shuster's consumer publishing division because it, unlike the educational or reference units, lends itself to tighter integration with Viacom's entertainment concerns - particularly cross-platform promotions with the television networks such as the MTV and Nickelodeon book imprints..
At the end of Wednesday trading on the New York Stock Exchange, Viacom non-voting stock [VIA.B] was down 7/16 at 43-3/8. 
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Simon & Shuster
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