CBS Will Sell Most of Its Book Division : Harcourt Will Pay $500 Million; Song Unit Also to Be Sold

CBS, in another move to cut back operations, said Friday that it will sell most of its book publishing business to Harcourt Brace Jovanovich and its music publishing unit to three New York businessmen.

The broadcasting giant will receive $500 million for most of its CBS Educational and Professional Publishing division, which consists of Holt, Rinehart & Winston, one of the largest publishers of school and college textbooks, and W. B. Saunders, a publisher of medical books.

CBS Songs, which holds copyrights for tens of thousands of popular songs, will be sold to a new concern formed by Stephen Swid, chairman of furniture maker General Felt Industries; and Charles Koppelman and Steven Bandier, who are music publishers and producers. No sale price was disclosed, but a source put the figure at about $125 million.

The book publishing units’ revenue came to at least $260 million last year, or about 6% of CBS’s total, according to an estimate by J. Kendrick Noble, industry analyst with the Paine Webber brokerage in New York.

He said the acquisition would lift Harcourt Brace, based in Orlando, Fla., into first place among school and college publishers, surpassing Gulf & Western Industries.

Consolidation of Field

The sale came as another step in the consolidation of the textbook publishing field and was also a sign of the current attractiveness of the elementary-high school textbook businesses. Only last week, Time Inc. said it would by Scott, Foresman & Co., a leading elementary and high school publisher, from SFN Cos.

Schoolbook publishing has gained luster as the sons and daughters of the baby boom generation have swelled the school-age population.

In a prepared statement, new CBS President Laurence A. Tisch said the publishing division “has been a stand-alone element of CBS, not closely tied to the media and entertainment businesses that make up the rest of the company.”

The proceeds of the sale are to be used to pay down short-term debt and possibly also for further acquisitions of television stations or other television-related enterprises.

Tisch said the company “remains interested in potential acquisitions, particularly in the field of television stations.”

A CBS spokesman denied that the company might sell its magazine division, which is the other large component of its publishing group and puts out such publications as Woman’s Day, Road & Track and Modern Bride.

Analysts noted that Tisch had earlier denied that he would sell the book publishing group. But they also noted that the currently weak market for magazine advertising might make an attractive offer for CBS’ magazines unlikely.

Several analysts said the price of the textbook unit was consistent with prices that have recently been paid for such operations. Noble said the price was between 10 and 11 times the unit’s 1985 cash flow, “which makes it a reasonable price.”

Analysts said the units’ elementary and high school businesses were stronger than the college textbook operations or the medical texts, although they were not as profitable as CBS’ other operating units. “It’s been one of the laggard pieces of CBS,” said Ed Atorino, analyst with the Smith Barney securities firm in New York.

Harcourt Brace evidently believes that it can increase the CBS units’ profitability when they are combined with its own, analysts said.

While CBS claimed that it had not sought purchasers, analysts said the company’s interest in selling off units had been well known for at least a year. “Every investment banker worth his suspenders has been calling,” Atorino said.

CBS intends to sell separately a small unit called Neisa Interamerican, which publishes books for Spanish and South American audiences.

CBS had earlier considered selling CBS Songs to a group that included the management of the division. John Branca, a Los Angeles-area attorney who represented the successful bidders, declined comment on the transaction.

CBS Songs publishes music, promotes use of its songs and collects royalties on them.

Among its titles are “Over the Rainbow,” “Blue Moon” and “Anchors Aweigh.” CBS’s 1985 annual report said the unit’s profits and revenue declined last year, largely because of the weakness of its overseas operations.