Pearson Sees Profits Fall 40 Percent, Selling Westminster Press Unit
LONDON (AP) _ Pearson PLC, reporting a 40 percent drop in first-half pretax profit on losses at its Mindscape software business, said Monday it will sell its Westminster Press regional newspaper unit for 305 million pounds ($470.4 million).
The media group also announced Monday it has named Michael Lynton, currently president of Walt Disney Co.’s Hollywood Pictures studio, as chairman and chief executive of its Penguin Group book publishing arm.
In addition, Pearson will acquire an additional 30.3 percent of newspaper and magazine publishing house Recoleto for 86.8 million pounds in cash and stock, raising its stake to 95 percent.
Westminster Press is being sold to Newsquest Media Group, which is backed by U.S. leveraged buyout specialists Kohlberg Kravis Roberts & Co. Pearson stock was 4 percent higher in London as the sale overshadowed its weaker financial results.
The publisher of the Financial Times newspaper reported pretax profit of 30 million pounds for the first six months of the year, compared to 50 million pounds in last year’s first half. Revenue rose 20 percent to 940 million pounds from 781 million pounds.
Mindscape, which publishes Internet software and computer games, had a first-half operating loss of 38.8 million pounds. The company said it estimates the full-year loss will be 44.8 million pounds.
``There is no hiding our disappointment about Mindscape, but the rest of our new acquisitions are performing well,″ said Pearson’s chairman, Lord Blakenham.
In February, Pearson said it would pay $580 million to acquire HarperCollins Educational Publishing Inc. from News Corp. Last month, Pearson said it would buy Interactive Data Corp. from Dun & Bradstreet Corp. for $201 million and invest in a $30 million entertainment center in New York.
Pearson accepted Newsquest’s bid for Westminster Press over a joint offer from Britain’s Mirror Group PLC and Ireland’s Independent Newspapers PLC. The newspaper groups reportedly bid as much as 300 million pounds.
Newsquest last year bought the British regional newspaper division of Reed Elsevier PLC for 205 million pounds.
New Penguin Group head Lynton will succeed Peter Mayer, who is retiring at the end of this year to return to The Overlook Press in New York, which he founded with his father 25 years ago. Mayer has been Penguin’s chief executive since 1978.