Milken readies S&S bid
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May 12, 1998: 2:39 p.m. ET
TCI, Oracle's Ellison to join ex-junk bond king in Simon & Schuster offer
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NEW YORK (CNNfn) - Viacom Inc.'s Simon & Schuster subsidiary has attracted an array of buyers, which if successful, could re-ignite growth of the sluggish publishing business.
As reported last week, bids for Viacom's assets are due Wednesday. The auction has sparked interest from competitors such as Pearson Plc of London as well as several financial players, including former junk bond king Michael Milken.
Milken has teamed up with the nation's largest cable operator, Tele-Communications Inc., and Oracle Corp. Chairman Lawrence Ellison, who is a partner with Milken in the Knowledge Universe LLC, people familiar with the situation said Tuesday.
Apollo Advisors LLP, which is controlled by Milken's one-time Drexel Burnham Lambert associate Leon Black, and Boston-based buyout firm Thomas H. Lee Co., has also signed on to the investment group, the sources said.
Viacom's decision in January to sell Simon & Schuster stems from the slower growth that education, professional and reference publishing businesses represent compared to entertainment businesses, such as television or motion pictures.
Because buyout groups typically look for investments that offer 20 to 30 percent rates of returns, some analysts believe Milken and his partners will boost returns through new technological outlets.
"If they're going to get a venture-capital rate of return on what has traditionally been a slow growth business, they will have to revolutionize the educational publishing market," said Stuart Rossmiller, an analyst at Deutsche Morgan Grenfell.
"They are going to have to get students and business professionals to use content in more than just a print-based format," he added.
TCI established an alliance with Knowledge Universe last fall through its ETC subsidiary. On Sept. 23, ETC and Knowledge Universe inked a letter of intent to partner up to make a "substantial investment" in a new venture. The partnership has yet to be completed.
ETC is one of several entities that form TCI Ventures Group LLC, along with companies such as @Home Corp., the cable Internet provider. Other businesses include Liberty Media Corp., TCI's programming assets.
LaRae Marsik, a TCI spokeswoman, declined to comment except to say that "if there were to be a hypothetical investment, it would be from TCI Ventures."
Viacom declined to comment, officials at Apollo and Thomas H. Lee did not return phone calls, and Milken couldn't be reached for comment.
-- by staff writer Robert Liu
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