MediaWeek (Vol 5, No 33 ) The Cost of Higher Education in the US - Chronicle, Economist, Bain + More

The problem with the cost of education in the US (Economist):

A crisis in higher education has been brewing for years. Universities have been spending like students in a bar who think a Rockefeller will pick up the tab. In the past two years the University of Chicago has built a spiffy new library (where the books are cleverly retrieved by robots), a new arts centre and a ten-storey hospital building. It has also opened a new campus in Beijing.

And it is not alone. Universities hope that vast investments will help them attract the best staff and students, draw in research grants and donations, and ultimately boost their ranking in league tables, drawing in yet more talent and money. They have also increased the proportion of outlays gobbled up by administrators (see chart 2).

To pay for all this, universities have been enrolling more students and jacking up their fees. The average cost of college per student has risen by three times the rate of inflation since 1983. The cost of tuition alone has soared from 23% of median annual earnings in 2001 to 38% in 2010. Such increases plainly cannot continue.

And The Chronicle also takes a look at the sober truth exacerbated by the slow economy (Chron):

This anecdotal evidence seems to be supported by reports in the past several weeks on the financial state of higher education. An analysis by Bain & Company and the private-equity firm Sterling Partners found that one-third of all colleges and universities in the United States face financial statements that are significantly weaker than before the recession and find themselves on an unsustainable fiscal path. Another quarter of colleges are at serious risk of joining them.

Meanwhile, two major credit-rating agencies, Standard & Poor’s and Moody’s Investors Service, released warnings that put a negative outlook on all but the name-brand market leaders in higher education. “We’re seeing prolonged, serious stress,” Karen Kedem, a vice president and senior analyst at Moody’s, told me.⁠ What is significant about the move by Moody’s is that it typically rates only colleges with strong balance sheets to begin with.

Here is that link to the Bain report:

Despite this success, talk of a higher education “bubble” has reached a fever pitch in the last year. The numbers are very familiar by now: Annual tuition increases several times the rate of inflation have become commonplace. The volume of student loan debt has surpassed $1 trillion and is now greater than credit card debt. Most college and university presidents, as well as their boards, executive teams and faculty members, are well aware that a host of factors have made innovation and change necessary.

Last month Blackboard held their annual get together and Inside Higher have a podcast of the highlights

In this month's edition of The Pulse podcast, Rod Murray discusses highlights from the annual Blackboard World 2012 gathering, including information on its new products, services and applications.

From FT writer Simon Schama a contrasting views of the US and UK popular reaction to the games (FT):

At a time when the gap between rich and poor is growing wider, the educational prospects for minorities are loaded with prohibitive debt, when democracy has become the catspaw of plutocrats; what the American people want from the strength, grace and resolution of their athletics is one place where the founding promise of upward social mobility, that Dream thing, is not a sick joke. In the republic of exertion the dream comes true. You have your gift, you work it to the max; you bring it to the day; you breast the tape, touch the lip of the pool, you let yourself weep as the Star Spangled Banner plays and you fold it about your shoulders – and it feels still that there is a place for young Americans, against whom the odds have never been more brutally stacked, to be winners.

If anything, there’s even more at stake for the British. The economy is flatlining; the coalition seems to have lost the plot. Yet from Danny Boyle’s Fabian extravaganza to the sudden cascade of golds that began with Heather and Helen sitting in their boat looking as ecstatically amazed as all the rest of us, a startled, almost embarrassed, suspicion, that the British could actually be world beaters by being themselves, began to dawn.

Coelho has a go at James Joyce and The Economist's Prospero takes exception:

The above two quotes neatly show the dividing line in this latest literary skirmish. Mr Coelho and Salman Rushdie are the same age, are widely read and employ magical realism in their work. Both authors have received prestigious international prizes, and find inspiration in the Bible and "One Thousand and One Nights". But only one of them credits his sources, writes literature, and worships James Joyce.

Another line worth quoting is Mr Coelho’s dictum that a writer has “a duty and an obligation never to be understood by his own generation.” Let’s see here…hmmm...Joyce was the very picture of a starving artist, a virtual exile from his own country, accused of pornography and reviled in his lifetime (and occasionally since) as a writer of unreadable books. Mr Rushdie is similarly big in Tehran. The impossibly avuncular Mr Coelho, on the other hand, may be the Most Understood Author on the planet. Every Coelho bookcover trumpets his success, wooing potential buyers with the promise that he has sold hundreds of millions of copies in over a 160 nations, translated into over 72 languages—the most by a living writer, Guinness confirmed. One wonders if his business card touts: “Over 150 Million Served.

From my twitter feed this week:

Amazon Stops Processing Payments For Crowdfunding Platform For Creative Commons Books http://dlvr.it/1zQPpr

Adam Gopnik remembers Robert Hughes: "One of the indispensable mavericks of modern humanism." New Yorker

Amazing: 'History Man' - the front page of tomorrow's Sunday Telegraph Telegraph

MediaWeek (Vol 5, No 19): HuffPo's Aggregation Model, Espresso Books, FT on the state of Publishing +More

From the Columbia Journalism Review a long review of how Huff Po came to define the news aggregation 'business' (CJR)

Before its purchase by AOL in February 2011, HuffPost was not a property that had produced much in the way of revenue; it had posted a profit only in the year before the sale—the amount has never been disclosed—on a modest $30 million in revenue. Aside from scoops from its estimable Washington bureau, it did little in the way of breaking stories, the industry’s traditional pathway to recognition.
Huffington Post, which had mastered search-engine optimization and was quick to understand and pounce on the rise of social media, had been at once widely followed but not nearly so widely cited. But that is likely to change now that it can boast of a Pulitzer Prize for national reporting—the rebuttal to every critic who dismissed HuffPost as an abasement to all that was journalistically sacred.
Arianna Huffington liked to boast that the site that bore her name had remained true to its origins. The homepage’s “splash” headline still reflected a left-of-center perspective; it had thousands of bloggers, famous and not, none of them paid; and while there was ever more original content, especially on the politics and business pages, the site was populated overwhelmingly with content that had originated elsewhere, much of it from the wires (in fairness, an approach long practiced by many of the nation’s newspapers). But Huffington Post had evolved into something more than the Web’s beast of traffic, blogging, and aggregation. These days, Arianna Huffington has a regular seat at the politics roundtable, which speaks not only to her own facility on TV but also to the prominence her organization enjoys.
Power can be felt, even if it defies measurement. By the winter of 2012, Huffington Post could lay claim to a widely shared perception of its growing influence—the word Huffington prefers to power, which, she says, sounds “too loaded.” For better or, in the eyes of its critics, worse, Huffington Post had assumed the position of a media institution of consequence.

Taking a look at the Espresso Book Machine at Powells (Mercury)

When I was at Powell's, before I went up to look at The Machine, I spent a few minutes talking myself down from buying a Poe Ballantine novel published by local house Hawthorne Books. I almost bought the book half because I want to read it, and half because it was pretty—Hawthorne puts out lovely books with distinctive covers and classy French flaps (when a soft-cover book folds in on the sides like a dust jacket). It's often suggested that with the increasing popularity of ebooks, publishers should/will move toward the McSweeney's model of publishing, which emphasizes "book-as-object." The Book Machine is a step in the opposite direction, back to book-as-collection-of-paper-that-has-words-on-it.
Mercury Film Editor Erik Henriksen—a regular Kindle user—expressed extreme bafflement at the existence of such a machine. I'd use it, though: Despite owning and liking a Kindle, I still have a stubborn preference for reading in print, and all other things being equal (price, convenience, availability) would always take a print book over a digital one. Plus, being able to create physical copies of hard-to-find/out-of-print titles is pretty amazing in its own right.

Warren Adler op ed in (you guessed it) the HufPo on The Coming Battle of eReaders (HuffPo):

There are thousands of categories that e-books support, running the gamut from instruction to politics and every thing in between and beyond. Works of the imagination, meaning fiction, cover numerous genres aimed to specific reader requirements. The so-called mainstream novel, the work I have labored to define, is the toughest category to monetize, especially in today's environment, which tempts creative writers to replicate and attracts the self-published.
The mainstream novel is also challenging to the author, who must be branded as a serious contributor in order to attain enough status to attract interest and sales where outlets for recognition and discoverability are shrinking.
While it was easy to make a prediction about the future of e-books it is no simple matter to predict the fate of the serious novelist in the ever-accelerating rough and tumble world of e-books. I suspect that most authors in this category will have to shoulder the task of relying on themselves to publicize, advertise, promote, and project his or her authorial name and titles, whether his or her books are published by a traditional publisher or via self-publishing. Authors of this material will either have to learn how to promote their own works or risk the ultimate curse of artistic endeavor... obscurity and dismissal.

I wasn't sure whether to pull this reference to the FT on the current landscape in publishing or not.  eBooks are big, Technology is a driver, publishers being sued, etc, etc.  You be the judge (FT):

As deep-pocketed tech companies tout ebooks to sell Windows 8 devices or Kindle Fires, iPads or gadgets running Google’s Android software, reading habits will change further, with profound consequences for retailers, publishers, authors and consumers.
The pace of change is already dramatic. According to PwC, the consultancy, US consumer ebook sales will grow 42 per cent to $2.5bn this year, or 11 per cent of the American consumer books market. But this may understate the growth. The Association of American Publishers said on Friday that ebooks accounted for 31 per cent of all adult trade sales in February, up from 27 per cent in the same period a year ago, with their share of the children’s and young adult market jumping from 10 per cent to 16 per cent in a year.
In Europe, ebook sales will grow 113 per cent, PwC estimates, but will end the year as less than 2 per cent of the market. In Asia, ebooks will be more than 6 per cent of the market by December, it predicts.
However, this comes at a heavy cost to print. Adult hardback sales fell 17.5 per cent last year, according to the Association of American Publishers. In the UK, The Publishers Association said this week that consumer ebook sales leapt 366 per cent in 2011 to 6 per cent of the total, but print declines left the total market down 2 per cent.

Joking about textbook prices (Link)

From my Twitter feed this week

The Man Who Revitalized 'Doctor Who' And 'Sherlock' http://n.pr/KsTaYF

BISG’s Making Information Pay Conference:Beyond “Business-as-Usual”;The Age of Big Data,by Lorraine Shanley /PubTrends http://bit.ly/IHI6sK

A universal digital library is within reach http://www.latimes.com/news/opinion/commentary/la-oe-samuelson-google-books-and-copyright-20120501,0,2442760.story

Pearson Rakes in $700MM from FTSE Sale

Pearson continues to shed non-core assets announcing today that they have sold their 50% interest in FTSE International Limited to The London Stock Exchange.  As they have done in the recent past, the company appears to have secured very good value from the divestiture.  Over the past two years, Pearson has quietly restructured their business, selling non-core businesses at high multiples, reorganizing internally and buying new businesses that expand their content distribution and service capabilities.

From the press release:

FTSE is a world-leader in the creation and management of more than 200,000 equity, bond and alternative asset class indices. With offices in London, Frankfurt, Hong Kong, Beijing, Shanghai, Madrid, Milan, Mumbai, Paris, New York, San Francisco, Sydney and Tokyo, FTSE works with partners and clients in 80 countries worldwide.

Pearson and London Stock Exchange Group currently each own 50% of FTSE. Under the terms of the agreement, London Stock Exchange Group will acquire from Pearson the 50% of FTSE that it does not own and continue to use the FTSE name. The transaction is expected to close by the first quarter of 2012.

In 2010, FTSE reported total revenues of £98.5 million and total EBITDA of £40 million. At 31 December 2010, FTSE had gross assets of £100.8m.

Pearson expects FTSE to make a total post-tax contribution to Pearson’s adjusted earnings of approximately £18 million or 2.2p per share in 2011.

The transaction follows the sale of Pearson’s stake in Interactive Data last year for $2bn. It marks Pearson’s exit from companies that are primarily providers of financial data and strengthens the FT Group’s focus on global business news, analysis and intelligence, increasingly delivered through subscription models and digital channels.

In her quote CEO Majorie Scardino emphasized that the sale will enable the company to continue their strategy of buying digital and service oriented businesses that compliment their core businesses.  “For Pearson, the transaction further strengthens our financial position at a time of significant macroeconomic turbulence. We are freeing up capital for continued investment in a proven strategy: becoming more digital, more international and more service-oriented in education, business information and consumer publishing.”

FT On Potential McGraw-Hill Break-Up

Reporting via mergermarket.com the FT suggests that the activist shareholders seeking to unearth greater value from their holdings in McGraw-Hill will face an up hill battle (FT).

McGraw-Hill has spent the last ten to twelve months receiving advice from a slew of media bankers, the industry bankers said. “Even if the activists have revolutionary ideas in mind, chances are it’s already been pitched to the management and considered under various scenarios,” the first of the bankers said.

And further comments on the education assets specifically:

McGraw-Hill has been receiving sales pitches for its education publishing assets, specifically its higher education textbook assets, the first and second bankers said.
These assets have drawn strong interest from financial sponsors like Blackstone and Hellman & Friedman and could fetch around USD 3.5bn in a sale, according to a lender following the situation. Both sponsors declined to comment.
Other sponsors with historical expertise in education include Bain Capital, KKR, Providence Equity Partners, and Warburg Pincus.
The approaches come as McGraw-Hill has been accused of being slow to respond to technology changes in the publishing business.
“They’re not playing in the back-office ERP (Enterprise Resource Planning) areas and student information systems that Pearson (PSON:LN) or GlobalScholar are playing in and that are higher growth margins,” said a third banker.
Pearson’s education sales jumped 7% and operating profit rose 16% last year based on public filings, meanwhile McGraw-Hill’s revenue and operating income for 2Q11 decreased 5.0% and 18.3%, respectively. Pearson, the owner of the Financial Times, is the parent company for this news service.
With McGraw’s education business not growing, it makes sense to consider a split of the business from the company’s profitable Standard & Poor’s ratings service, the industry bankers said.

More from the FT here.