“We are taking further action to simplify our business, reduce our costs and position ourselves for growth in our major markets.”
If you’ve ever worked in a major corporate environment, those are the words that make you need to stay away from open windows. And, indeed, Pearson PLC, the world’s largest publisher of textbooks and other educational content, has announced in its January trading update that cuts of 4,000 jobs, about 10 percent of its workforce, are on the way.
This isn’t entirely unexpected. Michael Cader at Publishers Lunch was shooting up flares in his Jan. 8 lookback, “Taking Stock of a Rough Year” (paywall), writing of Wall Street scrambling for cover on this one: “Since announcing a small drop in sales and modestly reduced earnings expectations in October, [the company’s] investors have abandoned Pearson’s shares. Down 42 percent in 2015, the company shed $6.4 billion in market capitalization—and with a rocky stock market to begin 2016, it has declined another 6 percent this month.”
Pearson owns 47 percent of Penguin Random House (PRH). The word from London is that PRH jobs won’t be affected by the restructuring. Still, as you will have read in our bonus issue of The Hot Sheet last week, some observers are not liking the consolidation they see going on inside units of the big publisher.
In understanding the industry’s wider dynamics, it’s important to get a sense for what’s behind the stress on this big player in educational publishing. As Valerie Strauss writes at the Washington Post, “Pearson said the restructuring … is required by ‘cyclical and policy related challenges in some of our largest markets’ that ‘have been more pronounced and extended than we expected when we outlined our plans three years ago.’ They include falling college enrollment in the United States, fewer students in England and Wales taking vocational courses, and lower-than-expected textbook purchases in South Africa.”
In addition, Philip Jones at The Bookseller has just put his own apt phrasing on what’s going on, noting the textbook-market-in-turmoil is “a result of the creeping digitisation of the marketplace, the raising of textbook prices, and the opportunity that now exists for publishers to bypass the campus bookshop.… Pearson’s recent travails show what can happen when expectations of how a global digital marketplace will develop overreach customer demand, institutional need, or just local mores. This is a marketplace changing fast, but not yet in ways that seem fixed.”
Strauss also points out just how pervasive Pearson is, summarizing points made by John Oliver of HBO’s Last Week Tonight: “It is possible for U.S. students to take Pearson-designed tests from kindergarten through at least eighth grade, use Pearson-designed curriculum and textbooks, and have teachers certified by a Pearson test. Furthermore, Pearson offers a test used in many schools to identify learning disabilities, and it now owns the GED, the test taken by high school dropouts who want the equivalent of a degree.”
Bottom line: When a player the size of Pearson gets a cold, lots of people start sneezing. And some of the commentary coming from the company is blizzard-weekend chilly, as when it talks of print volumes declining to such a degree that its warehouse volume “has fallen by 56 percent.” (Not everywhere are they talking print resurgence!) For now, we’ll watch what the restructuring moves produce. It’s not over when the forecast for the year from the home office reads, “We expect trading conditions to remain challenging in our major markets in 2016.”
Jane Friedman has spent her entire career working in the publishing industry, with a focus on business reporting and author education. Established in 2015, her newsletter The Bottom Line provides nuanced market intelligence to thousands of authors and industry professionals; in 2023, she was named Publishing Commentator of the Year by Digital Book World.
Jane’s expertise regularly features in major media outlets such as The New York Times, The Atlantic, NPR, The Today Show, Wired, The Guardian, Fox News, and BBC. Her book, The Business of Being a Writer, Second Edition (The University of Chicago Press), is used as a classroom text by many writing and publishing degree programs. She reaches thousands through speaking engagements and workshops at diverse venues worldwide, including NYU’s Advanced Publishing Institute, Frankfurt Book Fair, and numerous MFA programs.
