By Samrhitha A and Dawn Chmielewski
(Reuters) -Paramount Global said it would sell Simon & Schuster to private-equity firm KKR & Co for $1.62 billion in cash, ending a year-long attempt to sell the marquee book publisher.
Shares of the media company rose 4% in extended trading after Paramount also beat estimates for second-quarter earnings, riding on strong growth in its streaming business.
Paramount has been trying to offload Simon & Schuster, the publisher of authors such as Stephen King and Hillary Clinton, since a federal judge blocked its $2.2 billion sale to Penguin Random House last year.
"Simon Schuster is a fantastic asset, but ... it's not core," CEO Bob Bakish said on a post-earnings call.
Bakish did not provide an update on the sale of other company assets. The company is exploring the sale of a majority stake in BET Media Group, which includes the BET cable network.
Paramount will receive gross proceeds of $2.2 billion from the sale of Simon & Schuster, including a $200 million termination fee paid by Penguin Random House and the cash flow it received during the process. It expects to use the proceeds to pay down debt.
The move comes at a time when the company is striving to bolster its streaming service, Paramount+, in a fiercely competitive industry dominated by Netflix (NASDAQ:NFLX) and Disney+.
Revenue in the direct-to-consumer unit, home to Paramount+ and PlutoTV, grew 39% in the second quarter, helping offset a 29% decline in the filmed entertainment business
Total revenue was $7.62 billion, above estimates of $7.43 billion, according to Refinitiv data. Adjusted profit of 10 cents per share was also better than expectations for the company to break even.
Finance chief Naveen Chopra promised "significant earnings improvement" in the streaming business next year and projected a 20% rise in average revenue per user on Paramount+ in 2024.
The company implemented the first price increase for Paramount+ and launched the integrated Paramount+-Showtime service during the quarter. Its streaming unit's operating loss narrowed to $424 million from $445 million a year ago.
Still, the company faces risks from the ongoing strikes by Hollywood writers and actors, which have disrupted the production of scripted series for the fall TV season and halted work on films.
As production of most scripted series has stopped, Bakish said CBS would fill its fall lineup with hits such as "Yellowstone" and streaming shows such as "SEAL Team."
It also licensed the rights to the U.K. version of "Ghosts," to pair with the U.S. version of the show.
"Strikes do present some marketing challenges, though the film slate for the rest of the year is stacked," Bakish said, adding that it was too soon to predict its impact on 2024 films.
Upcoming film releases include "Killers of the Flower Moon," which will be released in theaters in October before coming to Apple (NASDAQ:AAPL) TV+, as well as "Mean Girls" the musical.