Saturday, October 25, 2003

Oligopoly profile: Pearson Pearson PLC is a UK-based publishing company that has grown through a series of multinational acquisition. In the past, it sapped up overpriced publishing properties indiscriminately, but over the past few years it seems to have gotten its act in order, selling off some of the less profitable divisions and concentrating on a few areas where it is a dominating force. Pearson is now the leading educational publisher in world, and has a strong position in business periodicals and in commercial book publishing.  The Education division publishes in 55 countries and in 27 languages. But the biggest part of that is the textbook industry in the US, with offerings that start at kindergarten and go through high school, in almost every subject. It has built on that with a wide range of teaching aids and educational software. Pearson claims that some 50% of American schools use their textbooks and materials in at least some classes. And should parents choose to home school, a growing option in the US, Pearson has its own software and curriculum for sale. Pearson is the also the number one company producing standardized testing in the US. It claims to score and process over 40 million tests a year, They are benefiting as the US educational system gets crazy about standardized testing. The company has a major stake in teacher training programs, and it also provides software for school administration. Indeed, the company is in the enviable position of running the tests and selling the textbooks that prepare for the tests, along with training the teachers to help students pass the tests. This is sort of like having the publisher choose the book reviewers. It gives it an enormous power of shaping the textbooks to the tests and vice versa. Pearson is also the leading publisher of college textbooks in the world. It also allows professors to custom publish course materials, gathering together various source materials in a unique book format. Use of such on-demand books is slowly growing, especially in the sciences. In the business and technical publishing areas, Pearson offers two of the most respected financial publications in the world, the newspaper the Financial Times (one of the fastest growing newspapers in the world) and the magazine The Economist, of which it has a 50% interests. The company publishes business periodicals in Germany, France, Portugal, Russia, Spain, and South Africa as well. The company has snapped up a number of technical book publishing companies as well. It has done a good job and putting together for-pay online training and support sites. Pearson's flagship commercial book house has been doing quite well for the last few years. It is number one book publisher in the UK, Australia, New Zealand and India and number two in the US and Canada. Pearson is also the world leader in children's book publishing, with imprints like Putnam, Grosset & Dunlap, Dutton, and Dial. In 2000, the company bought Dorling-Kindersley, a major publisher of illustrated reference guides and owner owns a library of 2.5 digital images. According to Manchester Guardian article, ("Penguin in Pearson's good books", 12/28/02), the last few successful years have made the Penguin Group stand out among Pearson's assets. That's not easy in the slow-growing book publishing market. Pearson's strategy under boss Marjorie Scardino has been to only own businesses that are number one or two in their market. So over the past five years, Penguin has been built up - largely through acquisition - to become one of the biggest and most profitable publishers of trade books anywhere in the world. While Pearson still has some small broadcast interests in Spain, it recently unloaded (in 2001) its share of European broadcast chain RTV to publishing rival Bertelsmann. In past years, Scardino also sold off investments in the Tussauds Wax Museum group and in the Lazard investment banks. Not very long ago, the company looked like a takeover target and a failure. It's done better than most in the industry, but it is still under enormous pressure and has to announce a loss last quarter. Advertising is still down, and money for US educational expenditures is getting scarcer. The strategy of essentializing the company to a few main interests has worked, and it has done better than the rest of the media and publishing industries. In the end, what might save it from a takeover is that no one else may have the interest or the cash to buy off significant sections of the company. Pearson PLC Properties Area Category Properties Education Elementary textbooks Scott Foresman   Secondsry textbooks Prentice Hall   College textbooks Prentice Hall, Addison Wesley, Longman, Allyn & Bacon.   Learning and assessment tools Pearson Early Learning, Pearson Digital Learning,, SchoolSuccess   Testing Pearson Assessments and Testing   Educational data management Pearson NCS Data Management   Home schooling programs Family Education Network Technical publishing and training Technical publishing Addison-Wesley Professional, New Riders, Peachpit Press, Prentice Hall PTR, Que, Sams, Cisco Press. Markt+Technik (Germany), Alhambra (Spain) , Wrox, CampusPress, Peachpit Press, Adobe Press, Oracle Press, Bloc Notes Publishing, Macromedia Press, Adobe Press, Conference Micro   Technical site InformIt.com   Technical/business training FT Knowledge   Governmnet training Pearson Government Solutions Business Publishing and Training Principal business periodicals The Financial Times, The Economist (50%)   Other periodicals The Banker (UK), Money Managemen (UK)t, Financial Advise (UK), rLes Echos (France), Expansion (Spain), FT Deutschland (Ger), Xgames (Germany), Investors Chronicle (UK), BOFM (South Africa, 50%), Vedomosti (Russia, 60%)   Business sites FT.com, FT Interactive Data, FT Investo   Management books les echos editions (Fr), Vilalge mondial (Fr), VMP (Fr)   Equity indexes news publishing FTSE International (50%) Book publishing Flagship press Penguin   Other English-language presses and imprints Allen Lane, Avery, Berkley Books, Dutton, Hamish Hamilton, Michael Joseph, Penguin Classics, Plume, Putnam, Riverhead, Viking.   Children's books Puffin, Frederick Warne, Dutton, Grosset & Dunlap, Dial Books, Ladybird   Illustrated reference books Dorling Kindersley Grupo Recoletos Spanish maagzines Marca, Expansión, Actualidad Económica, Gaceta Universitaria, Golf Digest, Estadio Deportivo , Correo Médico, Correo Farmacéutico, and others   Spanish cable TV Expansión TV business channel)   Spanish radio Radio Marca (sport)   Update 12/9/2003: A reader pointed out correctly that Wrox Press is not owned by Pearson, rather by John Wiley.  Pearson does ahve an alliance in place to distribute Wrox books in certain countries, 5:46:38 PM

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