Publishing/Writing: Insights, News, Intrigue

04/09/2013

Educational Publishing – Big Shake Up In Curriculum Standards Blows Sector Wide Open


In the U.S., the K-12 industry for textbooks and other educational materials generates $7.8 billion in revenue.

Do you realize that K-12 textbooks and associated educational materials generates a revenue of 7.8 billion dollars per year? Holy mathematics! I had no idea. I always knew there was big money in this publishing niche — just not THAT big.

At any rate, it just became easier for the little guy to break into this sector than ever before.  This field ‘has been dominated by a handful of big companies known as the “the big three”: Pearson, McGraw-Hill Education and Houghton Mifflin Harcourt’ for 35 years or so — But, due to technology, changing curriculum standards (e.g. Common Core Standards) and some states (like California) de-centralizing the book-selection process, industry watchers said the field is opening up.

This from Southern California Public Radio.Org by Mary Plummer:

Publishing industry shake up: New curriculum standards pave the way for the little guy

As new curriculum standards sweep across the country, the market for educational materials and textbooks is about to get a boost from districts that will have to restock. And just in time. Sales had been declining for three years.

“There should be a huge bump,” said Michael Kirst, president of the California State Board Of Education.

Kirst explains that many school districts had been holding off on buying books as they waited for the new standards to be implemented.

“This will be like what I hear is happening in the car industry where the average car is 11 years old and finally people have to get rid of them,” he said.

California is among 45 states nationwide plus Washington, D.C. already in the process of adopting the Common Core standards for math and language arts. The new standards, which have been pushed by the Obama Administration, represent a significant change in the country’s historically state by state system of education standards.

New science standards are also coming soon. After a several-year process that included multiple rounds of public comment, new science standards crafted by 26 states across the country will be released later this week.

Everyone agrees that all of these curriculum standard changes represent a major shift in K-12 education in the U.S. What’s less clear is how textbooks and educational materials producers will keep up.

For decades, the $7.8 billion industry has been dominated by a handful of big companies known as the “the big three”: Pearson, McGraw-Hill Education and Houghton Mifflin Harcourt.

But because of changes in technology — and because some states like California have de-centralized the book-selection process, industry watchers said the field is opening up. Tim Nollen, a senior media analyst for Macquarie Capital, said the new curriculum standards provide an opportunity for smaller companies to break in.

“I think everything could change,” he said. “Their field of competitors is much larger now than it ever used to be.”

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11/26/2012

McGraw-Hill + Apollo Management = Converging Education and Technology on a Global Basis?


Nice sounding title — but, the proposed purchase of McGraw-Hill Education by the private equity firm Apollo Global Management (a bloated name for a private equity firm — and whenever I hear ‘private equity firm’ I picture vulture capitalist firm Bain Capital) could just be a financial survival move.

While researching this publishing event I did come to realize how diversified McGraw-Hill actually was AND also the popular brand names that had been bought or invested in by Apollo.

For instance McGraw-Hill publishes numerous textbooks and magazines, including Architectural Record and Aviation Week, and is the parent company of Standard & Poor’s, Platts, and J.D. Power and Associates. It is the majority owner of the Canadian publisher McGraw-Hill Ryerson (TSX).  

And Apollo owns AMC Entertainment, Claire’s, Caesars Entertainment Corporation, Norwegian Cruise Line, and Realogy (Coldwell Banker and Century 21 Real Estate), CKE (Hardee’s and Carl’s Jr. Restaurants. Ltd) and CKX, Inc. (American Idol, Elvis Presley, Muhammad Ali)  

This PR Newswire from Bloomberg Businessweek gives details of the proposed sale along with some interesting financial numbers:

McGraw-Hill to Sell Education Business to Apollo for $2.5 Billion
 

NEW YORK, Nov. 26, 2012 /PRNewswire-FirstCall/ — The McGraw-Hill Companies (NYSE: MHP) (“the Company”) today announced it has signed a definitive agreement to sell its McGraw-Hill Education business to investment funds affiliated with Apollo Global Management, LLC (NYSE: APO) (collectively with its subsidiaries, “Apollo”), for a purchase price of $2.5 billion, subject to certain closing adjustments. As part of this transaction, McGraw-Hill will receive $250 million in senior unsecured notes issued by the purchaser at an annual interest rate of 8.5%.  The transaction, which is expected to close in late 2012 or early 2013, is subject to regulatory approval and customary closing conditions.

Upon closing, McGraw-Hill, which will be renamed McGraw Hill Financial (subject to shareholder approval), will be a high-growth, high-margin benchmarks, content and analytics company in the global capital and commodities markets. With customers in more than 150 countries, McGraw Hill Financial expects 2012 revenue of approximately $4.4 billion with nearly 40% from international markets. The Company will provide 2013 financial guidance for McGraw Hill Financial when it announces its 2012 fourth quarter and year-end financial results.

“After carefully considering all of the options for creating shareholder value, the McGraw-Hill Board of Directors concluded that this agreement generates the best value and certainty for our shareholders and will most favorably position the world-class assets of McGraw-Hill Education for long-term success,” said Harold McGraw III, Chairman, President and CEO of The McGraw-Hill Companies who will lead McGraw Hill Financial once the transaction is complete. “We were able to secure an attractive outcome and create additional balance sheet flexibility for McGraw Hill Financial.”

Mr. McGraw added, “McGraw-Hill Education is a leader in digital learning with world-class content and enormously talented and committed employees. As we begin the next chapter in our rich history, I am very proud of and grateful to all the McGraw-Hill Education professionals who are contributing so much to the company and to educators, administrators and students all over the world.  I look forward to seeing their continued success with the expertise and support of Apollo.”

“We are excited about this announcement and what it means for McGraw-Hill Education,” added Lloyd G. “Buzz” Waterhouse, President and CEO of McGraw-Hill Education. “Apollo is a leading global alternative investment manager and its affiliated funds have made significant investments in learning companies for more than a decade. McGraw-Hill Education’s expertise and premier brands coupled with Apollo’s resources represent a powerful combination.”

Larry Berg, Senior Partner of Apollo said, “With a longstanding track record of investing behind leaders in education, Apollo is pleased to be acquiring a marquee business that has been a pioneer in educational innovation and excellence for over a century. McGraw-Hill Education has a deep and impassioned management team, and we share their enthusiasm and strategic vision for the business. We look forward to leveraging the company’s leading portfolio of trusted brands and innovative digital learning solutions to drive growth through the ongoing convergence of education and technology on a global basis.”

“Today’s transaction marks a transformative time for our company, shareholders, customers and employees,” Mr. McGraw said. “This move builds on McGraw-Hill’s strong legacy and gives us an unprecedented opportunity to focus on accelerating the growth of our iconic brands and leading franchises such as Standard & Poor’s, S&P Dow Jones Indices, S&P Capital IQ, Platts and J.D. Power and Associates. The strong trends driving global financial markets create enormous growth opportunities for McGraw Hill Financial.  As markets become more interconnected, as more borrowers around the world fund growth through the capital markets, and as technology produces more and more data in a complex world, our leading brands provide essential intelligence and independent benchmarks across asset classes and markets.”

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08/20/2010

Publisher ‘Inkling’ Leading in Interactive Content Publishing


Inkling has evidently developed an interactive content publishing platform that will be useful to many applications outside it’s own educational, textbook mission…and is raising series A funding for further development.

Seems only fitting that an educational publisher, that deals with teaching in an interactive environment, would be the innovator of such a platform in the new digital publishing world.

Here are more details in a press release from Business Wire :

Inkling(tm) announced its Series A financing today, led by Sequoia Capital with participation from Kapor Capital, Sherpalo Ventures and Felicis Ventures. Inkling delivers engaging interactive textbooks that feature powerful social collaboration, integrated multimedia, and instant learner feedback. Inkling also launched its platform for advanced learning content today with the immediate availability of its iPad app.

Inkling Founder and CEO Matt MacInnis announced that the company has added Peter Currie, Former CFO of Netscape, and Bryan Schreier, Partner, Sequoia Capital, to its board.

The publishing industry is undergoing a fundamental transformation as devices like iPad enable new interactive digital experiences. Getting content onto these devices is expensive, and best practices aren’t yet established. Educational content in particular presents special challenges because of its visual and informational complexity. Inkling provides a scalable platform for creating complex interactive experiences for multiple platforms, starting first with iPad.

“We’re going to change the way people learn,” said Mr. MacInnis. “And our object-oriented publishing platform positions us to accelerate change in the publishing industry, benefitting publishers, students, and educators alike.”

“Inkling has produced a groundbreaking platform for interactive content publishing in a market that’s primed for innovation,” said Mr. Schreier. “With its visionary product strategy and phenomenal team, Inkling is leading the way for digital content platforms, not just in education, but in digital publishing everywhere. We’re excited to be a part of it.”

Inkling was founded in late 2009 to tackle the challenges of interactive publishing. Inkling’s partnerships with major publishers like Cengage Learning, John Wiley & Sons, McGraw-Hill, and Wolters Kluwer will yield next-generation interactive titles that replace traditional textbooks and other printed learning materials.

Contacts:
Inkling
Lauren E. Struck, 415-975-4423
lauren@inkling.com

12/30/2009

Analysing the Global Ranking of Publishers



This great annual ranking will open your eyes to who REALLY are the biggest publishers on the world-wide stage, who their subsidiaries are and who owns who!
Just click on the rankings image to view in larger size.

From Publishing Perspectives by Rüdiger Wischenbart:

For the past three years publishing consultant Rüdiger Wischenbart has released a “Global Ranking of the Publishing Industry,” which looks at companies with revenues over $US250 million. Here is his analysis of the latest ranking, focusing on how the changing dynamics between the professional/science, education and trade sectors have have affected this year’s ranking.

It is a strange world we live, read and publish in. Among the top ten global publishing groups, just five have a significant presence in trade books: UK’s Pearson (with its Penguin group), Germany’s Bertelsmann, of course (with Random House and the ever ailing “Club” business), France’s Hachette Livres (which is also a strong player in education), Spain’s Planeta (the new kid on the block, having gobbled up France’s #2, Editis), and Italy’s De Agostini. Oh, and by the way, they are all headquartered in Europe.

This being said, many companies in the rankings are doing much better, both economically and in terms of re-inventing themselves. While the Pearson group performs remarkably well in comparison to most of its peers, the real powerhouse seems to currently be Thomson (now Thomson Reuters), last year’s #1, and currently #3. It slipped to this position due to last year’s internal reorganization following its merger with Reuters, the result of moving a major stake of its old information business into the new, news driven Reuters division and of selling off “Thomson Learning”, which is performing well under the newly established brand of “Cengage” (#13 on the list). Thomson’s traditional publishing arm, in this perspective, is still good enough to rank it #3 on the global scale.

The story also demonstrates a much more fundamental lesson about how “the book industry” has completely reoriented itself within just a few years when it comes to handling “professional information” (which includes STM, science, journals, and a lot of other pragmatically useful content). Today, this wealth of information is born digital, distributed digitally, and is not available in any bookstore near you.

This “professional information” has become the primary load bearing column in what amounts to a new global temple of knowledge.

Accordingly these “knowledge groups” prefer generating four out of five dollars (or euros) from an integrated digital value chain. Digital subscriptions, they explain to their stockholders, because they’re often sold to institutions, bring in a consistent flow of revenue, and are a much better financial bet than struggling to sell a single book at a time to an individual reader.

This new era of digital integration is a bit more difficult to cope with if you’re an education publisher. Pearson Education has taught everyone the lesson of how to sell content plus branding plus distribution plus services (i.e. testing and scoring materials) on a global scale. Recently, the dream of selling education has been the catalyst for other mergers and acquisitions in the sector. But this has merely resulted in companies faced with huge debts and few sound and sustainable business models. This is why, at least for the moment, education is an unstable column in our new global temple.

That said, there is a new and interesting publishing terrain out there. It reminds one of the famous Chinese curse: “May you live in interesting times,” which of course translates to unrest, uncertainty, famines, floods, and the like. It is important to note that in the field of education, the first major Asian global players have stomped into our temple of knowledge and proclaimed, “Here we are. We represent major markets with the potential for substantial growth, and, after having bought your content for quite a while now, we now want to play the game on a more level playing field!”

Companies like Korea’s Kyowon or China’s Higher Education Press have pretty strong arguments and opinions when it comes to “localizing” content (i.e. cultural adaptation) but also to the economics of it all. “We want to take our rightful place among you,” they are saying.

Only the third pillar of the temple — if we want to think of our industry in such classical patterns — is traditional “trade” publishing, or just plain books. Looking at the numbers among the global top 10 as well as further down the list, we see a steady decline in the revenues in trade. There has been no real drama as of yet; just a few percentage points falling off each year.

What’s interesting to point out is that a few ambitious winners can still be found in this otherwise flat environment. Penguin is pursuing a strong strategy, both at home and internationally, and has become the leading brand for global literature. There are also a few, new regional players vying for a larger role, including Planeta (as noted above), Denmark’s Egmont — which had a significant boost from Harry Potter, and has a significant presence in emerging genres like Manga and graphic novels — and Sweden’s Bonnier, which has substantial holdings in Germany. In this, Bonnier is like Holtzbrinck, Germany’s second largest group. They are less about bold growth and innovation than sustaining a relatively boring, if solid presence in the market.

So what is next? One thing is probably quite easy to predict: The combined forces of digital and economical change, together with globalization, will be hitting trade publishing sooner rather than later,that’s for sure. Couple this with the fact that people are now reading differently, for different purposes, in different contexts, and based on different economic rationales than was the case ten or even five years ago and we know something is about to occur.

What this means in detail is certainly more difficult to foresee. Take the example of professional (science) publishing. Wouldn’t consumers prefer to subscribe to a vast amount of (digital) reading that can be delivered online or via cable TV subscription for five dollars (or Euros) per month, rather than buying individual titles for a much higher price?

But what will happen if Internet or phone or cable TV providers consider reading as too small a niche to cater to? Or what if publishers balk at the idea of feeding their books into such pipelines? The likely outcome of that scenario is that trade publishing may be in for some serious trouble sooner than we think.

Some wise person once said that “making predictions is always a headache, particularly when it is about the future.” Which is why, for the moment, I can only offer a picture of the status quo, backed up by a few numbers, and with a history of a few years, at least, to illustrate a few trends. Digitization and globalization does not spell the end of publishing, or of books for that matter. But one thing is for certain: things won’t stay the same for long.

The “Global Ranking of the Publishing Industry” is an initiative of Livres Hebdo, Paris, researched by Ruediger Wischenbart Content and Consulting, and co-published with buchreport (Germany), The Bookseller (UK) and Publishers Weekly (US), with yearly updates since 2007.

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