Pearson tightens Telefonica ties

Media co. gives 5% to telco, drops Lazard banks

By ERICH BOEHM, JOHN HOPEWELL

LONDON -- Media group Pearson is selling its stakes in the Lazard investment banks and strengthening its strategic alliance with the Spanish telco Telefonica.

French investment company Gaz et Eaux is picking up Pearson's interests in the London, New York and Paris- based banks -- which date back 80 years -- for £410 million ($647 million). Pearson receives an extra $23.8 million dividend on completion of the sale.

Focus on media biz

The deal furthers Pearson's refocus on its core media businesses, such as Pearson Television, the Financial Times newspaper and the Economist magazine. In the past year, Pearson disposed of its theme park division, which included the famous London wax museum Madame Tussauds.

Pearson chief exec Marjorie Scardino said the sale "allows us to invest all our resources in the businesses we manage and that are forming the future of Pearson."

Telco gets Pearson stake

In the deal with Telefonica, the telecommunications and media giant will acquire a 5% stake in Pearson worth $639 million.

At the same time, Pearson takes back the 20% of Recoletos, Pearson's Spanish subsid, that Telefonica acquired in a September 1997 share swap. Pearson received a 10% stake in the Telefonica-owned commercial web Antena 3 TV. Pearson already held 5% of Telefonica's digital platform, Via Digital.

Telefonica is one of the biggest cable and Internet players in the Spanish-speaking world. Pearson and Telefonica have plans to launch two as-yet-unnamed joint ventures aimed at creating content for television and the Internet in Spain and Latin America. TV co-production will likely be involved.