Saturday, February 17, 2007

Educational publishing consolidating for a new future

This week Reed Elsevier announced that it will get rid of its loss leader, the educational division. The company wants to concentrate on medical, scientific and business information. Reed Elsevier wants to pay the revenues of the sale, estimated on 2.4 to 2.9 billion euro to the shareholders. Reed Elsevier is the third publishing company, after Thomson and Wolters Kluwer, putting up the educational division for sale; VNU sold its educational division Malmberg to a private investor at an earlier stage. In the meantime HM Riverdeep in Ireland, the investment vehicle of Barry O'Callaghan, ponders about an offer of 2,78 billion euro.

It is interesting to see that all big publishing companies at a particular stage want to get rid of their educational division after that they have abandoned the newspapers and the consumer publishing divisions. The three companies, originating from The Netherlands, VNU, Elsevier and Kluwer all followed the same strategy, be it on different times. In 1980 they all three declared that they would start the internationalization process and they did. Kluwer, not yet part of Wolters Kluwer got first rid of the newspapers, and followed by Elsevier and VNU. After that the consumer divisions were sold; first Kluwer did away with consumer books and magazines, then Elsevier followed by VNU, selling the magazines to The Finnish company Sanoma.

By the turn of the century the three companies were not all clear about the ideal company. VNU never made a secret of the fact that it wanted to change from publisher to market data provider. Now VNU has changed into Nielsen Co. and sold its European business publications division VNU BME to 3i. But Wolters Kluwer wrestled with internet and the future direction; it sold off Wolters Kluwer Academic. The ideal would be Legal and Accountancy and business publications; in that order. Reed Elsevier was striving after medicine and scientific information and business publications.

The newspaper and consumer move left the companies with educational, scientific and business information division. The sale of the educational division was a question of time; the educational division was sold to the British venture capitalist 3i. Recently Wolters Kluwer put up it educational division. Now Reed Elsevier follows suit. And at the other side of the pond, the Canadian publisher Thomson has also put its education division in the window.

The future of the educational divisions is unclear. The former VNU educational division Malmberg has been bought by a private investor, most likely to sell it on. HM Riverdeep wants the Reed Elsevier educational divison to put Houghton Mifflin and Harcourt Education together. The other companies are still in the process of selling the divisions and they most likely will also be bought by venture capitalists as the potential buyers are publishing companies, which are not international or not financially strong. So, the venture capital companies will perhaps break up the divisions and try to sell them nation by nation. This would be analogue to the making of the German Springer company. The academic press Springer was sold to a venture capitalist as was Wolters Kluwer Academic; now they have merged and are operating as Springer.

After a consolidation, the educational divisions in whatever shape or form will get a new future.

Blog Posting Number: 667


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