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Discovery Education to Find a New Owner in SF Private Equity Firm

By Stephen Noonoo     Feb 27, 2018

Discovery Education, a large provider of print and digital textbooks and curriculum, is taking a big step away from its parent company Discovery Communications, best known for its broadcast TV channels. San Francisco-based private equity firm Francisco Partners has agreed to acquire a majority stake in the education business in a deal worth $120 million.

Discovery Communications will still retain an interest and will license the “Discovery Education” brand to the business. According to a company announcement, the current management team, led by president Bill Goodwyn, will stay intact and run Discovery Education as a separate business.

“From its earliest days, education has been rooted in Discovery’s DNA and we are extremely proud of the world-class business that Bill and his team have built,” said Bruce Campbell, an executive at Discovery Communications in the statement.

Campbell’s words echo those made by parent company CEO David Zaslav in 2012 to The New York Times, when explaining the company’s advantages over its competitors. “Educational content is core to our DNA, and we’re unencumbered—unlike traditional textbook publishers, we’re not defending a dying business,” Zaslav said at the time.

The true core of the education business—at least for the past several years—has been rooted in sales of math, social studies and science textbooks, particularly digital ones called Techbooks. It also offers streaming education videos and professional development services.

Although part of a publicly-traded company, Discovery Education’s financial standing is somewhat difficult to parse. In its annual financial disclosure filings, Discovery lumps its education business in with other unrelated services, including production studios, which combined make up about $160 million in revenue in 2017, or about 2.5 percent of the company’s total. Last year the “Education and other” division posted a fourth-quarter increase of $4 million over the same period in 2016, attributed to growing “international and digital textbook revenues,” according to the filing.

The deal is expected to close within the next few months. If completed, this would mark the second education technology asset purchased by Francisco Partners in as many years. Last year it acquired myON, a a digital reading platform for students in grades preK-12.

Discovery Education declined to comment further on the transaction.

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