Pearson's Wily Dealmaker
With the sale of Pearson PLC's 13.2% stake in the Lazard group on June 24, Marjorie Scardino capped off a deal-making spree that has dramatically reshaped the British media company in the 2 1/2 years since she became CEO. Extricating Pearson from its tangled relationship with Lazard has long been a priority for Scardino, and she managed to make it a profitable maneuver, too. One Lazard banker conceded that the approximately $650 million price was more than Michel David-Weill, Lazard's head, had hoped to pay; David-Weill has characterized it as fair.
Since taking charge in January, 1997, of the publishing giant that owns the Financial Times and Penguin Publishing, Scardino has sold $3.2 billion worth of noncore assets and spent more than $5 billion buying media and publishing properties. And the 52-year-old American-born exec doesn't seem to be done yet. In a phone conversation from California, where she is visiting digital-publishing subsidiaries, she said it would be a "big mistake" to stop fine-tuning Pearson's portfolio.
Her next big objective: push Pearson onto the Web. "When you are out here in California, you realize how much is going on," she says. "You have to make bets on what will be enduring and what is complete B.S."
Meanwhile, Scardino is spending heavily to boost the Financial Times' circulation beyond the current 80,000 in the U.S. The FT already owns leading business papers in Spain, Portugal, and France, and newspaper ventures in Germany and Russia. Its non-British circulation rose 37% last year, to 210,000.
Scardino is high on Spanish-language media. So she is strengthening ties with Telefonica, the former Spanish telecom monopoly that wants to dominate multimedia in the Hispanic world. Pearson has just agreed to supply game shows and dramas from its television-production division to Telefonica's TV stations in Spain and Latin America.
When Scardino took over, Pearson's stock was in the doldrums, and analysts and potential raiders were calculating the company's breakup value. Not anymore. By doing much of the breaking up herself, Scardino has actually managed to keep Pearson together. Before Lazard, her biggest sale had been Tussauds Group, the wax museum and amusements concern, for $563 million in 1998.
Along with rapid-fire asset sales, Scardino has been buying. Her biggest splurge: Last year's $4.6 billion acquisition of the education assets of Simon & Schuster from Viacom Inc. has cemented Pearson's position as a major textbook publisher. She has also staked out a clearer position in television by buying All American Communications, the producer of Baywatch and game shows such as The Price Is Right.
In other moves, she has installed new management at Pearson, including several Americans in key slots. Earnings rose 19% in 1998, to $622 million, on sales of $3.8 billion, helping boost the stock price by 65% in just under 2 1/2 years. Ad revenues and stronger textbook sales have been key sources of growth. "She has made it look easy," says Louise Barton, a media analyst at London broker Investec Henderson Crosthwaite. "She convinces just about everyone she talks to."
It is too soon to tell how all of Scardino's bets will fare: Global, multilanguage media is a tricky business. But give Scardino credit: She's transformed Pearson from a target to a player.