Tuesday, June 15, 2021

Mediaweek (Vol 14, No 5): B&N and Paper Source, Modern Econ, Wiley Annual Report, McGraw Hill Sells +More

econtopia.gr
Efforts to modernize the teaching of economics (The Economist- subscription)

Students say that inequality is the most pressing economic problem of the day, according to a paper by Samuel Bowles of the Santa Fe Institute and Wendy Carlin of University College, London. But in many textbooks, they argue, the topic is merely appended to the core curriculum. In 1993 a study found race and gender bias in introductory textbooks.

McGraw Hill in $4.5B Deal (Reuters)

Platinum Equity would acquire textbook publishing and educational technology company McGraw Hill for $4.5 billion from Apollo Global Management Inc (APO.N), the companies said on Tuesday.

Founded in 1888, New York-based McGraw Hill generates over $1 billion in annual revenue from its digital products, which include learning tools and platforms for schools and colleges, the companies said in a joint statement.

Since Apollo acquired McGraw Hill in 2013, the company has grown its digital portfolio from less than a quarter of its total revenue to over 60% now, the companies said. It completed six digital-focused takeovers during this time.

The Training is Coming from Inside the CMS (NYTimes)

The work was exhaustive and time intensive. And, because the team spent so much time training reporters and editors on how to use Oak, that left less time to train them to master different story formats, move swiftly during breaking news, make stories more visual and other skills needed in the new tool.

To help make Oak training more efficient, the N.D.S. and Oak teams launched a project aimed at building guidance — such as tooltips, helper text and best practices — directly into Oak. The goal: Give reporters and editors the help they need, in the places where they work, at the moments they need it most.

Barnes & Noble owner to buy Paper Source out of bankruptcy (Trib)

The acquisition will let Paper Source “emerge from Chapter 11 with the support of a well-capitalized owner committed to the development and growth of the business,” Elliott said in a news release Tuesday.

The purchase price was more than $91.5 million, including $40 million in cash and $51.6 million in loans, according to bankruptcy court records.

The Thought Police Come for Individual Lines of Dialogue in Novels (National Review)

Tying an author to the views expressed by fictional characters represents a breathtaking new advance for the cause of asininity in our culture. Hilderbrand’s response should have been to remind all readers that Norman Lear is not Archie Bunker, and her publishing house Little, Brown should have clarified that it does not submit its published books for re-editing by the mob.

Wiley released 4thQ numbers (Wiley)

FISCAL YEAR 2021 SUMMARY

  • GAAP results: Revenue of $1,942 million, Operating Income of $186 million, EPS of $2.63, and Cash Flow from Operations of $360 million
  • Adjusted results (at constant currency): Revenue +4%, EBITDA +16%, and EPS +27%
  • Free Cash Flow of $257 million, up 48% from prior year
  • Digital products and tech-enabled services now at 82% of total revenue, up from 80% a year ago

 Four Myths about Building a Software Business (McKinsey)

The attraction is obvious: the value that leading companies have captured by shifting to digital business models. Moreover, nearly two-thirds of companies expect that the digitization of their core businesses will be (or already is) essential to remaining economically viable. Only about 8 percent of companies believe that their current business models will remain viable if they don’t digitize. But making the shift to digital requires not only upgrading your IT and tech infrastructure, but also transforming your entire business model through creating, or even becoming, a software business (in whole or part), scaling a software offering, or using software as the core of your competitive advantage.

But while getting software into the core of your business model—or launching entirely new software businesses—might seem an obvious play in the current business environment, that doesn’t mean it will be easy. In reality, there are few successful cases of nonsoftware companies building software businesses (Exhibit 2) and many notable failures, including from otherwise high-performing companies. Of the approximately $500 billion in total global software revenues in the year 2019, nonsoftware natives captured only 20 percent. Nontechnology players, for their part, brought in only 6 percent (Exhibit 3).

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See more headlines from past MediaWeek posts - going back to 2006.


Wednesday, June 09, 2021

Clarivate Report Proquest Financials: Raise $1Billion in Equity

On May 17, Clarivate announce a proposed deal to acquire Ann Arbor based Proquest.  (See here).  In the last few days, Clarivate has reported more details including 2020 full year financials for Proquest.

Here is a summary:

  • Assets of $1.3B with $629mm in goodwill
  • $1B in long term debt
  • Revenues of $862mm
  • Operating Income of $84mm
  • Net Income of $3.4mm (Includes unrealized loss of $31mm)
  • Cash provided by operations $199mm
  • Net cash expended on acquisitions of $225mm
  • During 2020, the Company distributed $168.3mm to ProQuest Holdings, primarily related to distributions to shareholders

Management fees of $7mm were fairly modest.

More to be found here.

In addition, Clarivate also reported details on a $1B equity raise which some portion of which will go to fund the acquisition of Proquest.

Monday, June 07, 2021

Some Book Returns are Good: Managing Returns an Upcoming BISG Webinar

Book returns have long been the nemesis of warehouse and fulfillment managers and, sometimes conflict, when challenging the optimism of the sales team. Historically, it was the trade market where returns were (and remain) a significant component of the sales process to the exception of other publishing segments. However, this has changed significantly as the retail market – in education in particular – has become less structured. Whereas students used to purchase textbooks exclusively at the college store they are now as likely to buy their books ahead of time from Amazon for delivery to the dorm as they are to buy them at all.

As most publishing people know, managing returns and addressing the ‘returns problem’ is a perennial issue but it has been up to individual companies to act to improve their returns issues. In the US there has not been a direct industry led initiative to tackle returns but that is not the case in the UK. As far back as 1999, the industry began an initiative to understand the issue, identify the costs of returns and propose a set of progressive supply chain improvements in an industry led attempt to manage down the cost of returns. This initiative brought together all major players including publishers, retailers, wholesalers and other intermediaries, and gained traction approximately five years ago with the agreement on a set of resolutions or ‘rules of the road’ which govern interactions across the industry.

In the US, the UK initiative looks like an interesting model for us to study. The BISG has scheduled a webinar for July 20th to do just that and it is open to members and non-members.  In advance of the meeting, I have been asked to interview a group of supply chain participants (retailers, wholesalers, publishers) on behalf of BISG to determine how they have approached the returns issue(s) within their own businesses, their objectives in addressing returns and solicit their input on how BISG could support the industry to address returns.

At the webinar in July, we will tell the story of the UK experience and deliver the feedback I have gathered from our interviews. We will then solicit feedback from the attendees (and members) as to how BISG might support initiatives to improve the returns issue. So far, I can report that there are some interesting ideas and process improvement suggestions already being used by those addressing this issue and I expect we can discuss these at the meeting in July.  I hope you can join us.  If you would like to offer comments on this issue please do so below.

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Are you considering an investment in new technology?  Check out my report on software and services providers.  (PubTech Report)

Michael Cairns is a business strategy consultant and executive.  He can be reached at michael.cairns@infomediapartners.com or (908) 938 4889 for project work or executive roles.



Tuesday, June 01, 2021

Early Summer Newsletter: Accelerate Out of COVID (Bob Dylan is 80. The sun's not yellow, it's chicken).

*|MC:SUBJECT|*

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Our World

Over the past year, my colleagues and I have conducted multiple projects including back office technology implementations (Microsoft, NetSuite), due diligence support and a content development strategy. In addition, we conducted more than 25 interviews of publishing software companies to complete research for our annual Publishing Technology research report. You can read how these technologists see the impact of COVID via the link below. If your company is considering a business strategy or technology project, we want to help and are always happy to take a call (908 938 4889) or email to discuss your particular challenge.

Check out the following business articles of interest:
Taking the Temperature - How Publishing Technology Firms View the Future after COVID
 
Thinking about Selling your Publishing Business? Ensure a smooth process using this approach
Adobe Summit: Evangelists for Publishing. Check out the interesting new solutions relevant to publishers Adobe is bringing to market.
Consulting: Profiles of some of our consulting work from APA, WoltersKluwer, Wiley and others
Publishing & Industry News Clips
What if the hybrid office isn't real? - Strategy + Business
An Interactive Visualization of the Stanford Encyclopedia of Philosophy - Open Culture
How subscriptions took over our lives - Vox
A winning operating model for digital strategy - McKinsey
Publishers are using eBooks to extort schools and libraries - The Daily Beast Opinion
Digital skills and the future of work - New Statesman

Amazon Publishing, DPLA Ink Deal to Lend E-books in Libraries - Publishers Weekly
The Start-Up Disrupting University Textbooks - Management Today
Len Deighton Spy Novels - New Spectator
See more at Flipboard
Information Media Partners Consulting
Where we have been spending our consulting time recently...
  • We conducted a needs assessment, requirements gathering and project management for a prominent association publisher undergoing a finance system upgrade
  • For private equity clients, we completed due diligence reviews for several acquisitions. We contributed subject matter expertise, financial modelling and project management
  • Completed more than 25 interviews for our annual Publishing Technology report (see 2020 report) to be published in late summer
You can review more of our project citations by following this link

The coming year will be challenging and you will need help. Please get in touch to discuss a project and/or your long-term management needs.  (michael.cairns@infomediapartners.com)
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See previous newsletters: 

May 2021: Accelerate Out of Covid

February 2021: When New Models Don't Work 

December 2020: The Close of the Year 

Fall 2020: The Election Season: Vote! 

Spring 2020: You Are the Expert! Now Network. 

December 2019: 200 Million Students Await 

September 2019: Publishing News and Updates 

June 2019: Publishing News and Updates 

February 2019: Research Report Software Vendors for Publishing Companies

Wednesday, May 26, 2021

Amazon in Anti-trust Case: DC Attorney General Charges Price Fixing

Amazon is being sued by the DC Attorney General in a first US anti-trust case against the company. The charge alleges company practices caused higher prices for consumers and reduced innovation. The AG argues that Amazon's monopoly power was established in pricing agreements with third party resellers. Currently no other states have joined this suit but these types of anti-trust cases can go on for years. Amazon shares actually finished up on the day. (via @garyprice)
#amazon

 

Read the charges here