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Tag: Thad McIlroy

Thomson Learning– What’s next??

Earlier this year, I wrote that the announcement that Thomson Learning was for sale was an indictment of the current fundamentals of most learning market segments. From the perspective of Thomson senior management, the decision was to divest seems clear cut. Consider this comparative financial data:

Thomson Learning All Other Thomson Units

  • Organic Growth 4.0% 6.0%
  • Adj Ebitda 24.5% 29.2%
  • Operating Margin 12.9% 18.9%
  • Electronic Revenues 36.0% 80.0%
  • Recurring Revenues 24.0% 82.0%

(Source Thomson 4th Q Investor Presentation)

The percentages of electronic and recurring revenues are particularly at odds with CEO Harrington’s goal of integrating Thomson’s content with their customer’s work flows. After examining this data combined with declining unit volumes, growing price resistance, and increased government regulation, one wonders what motivated the private equity firms to pay the lofty multiples described in Thad McIlroy’s excellent post earlier this week.

Perhaps, they see the opportunity to create more new products that will blend content and technology to add value to the student’s learning experience. Vivid simulations and multimedia can help bring clarity to the explication of complex topics. Linking the appropriate content to solving problems improves student understanding while saving them lots of time and frustration. Making texts searchable and providing fresh links to appropriate Internet sites brings life and exploration opportunities to static textbook content.

Transitioning from a reliance on the sale of books and specific ancillary items to an intellectual property licensing model that is based upon usage metrics and attributes value to all aspects of course package (including the many package elements currently provided to faculty at no cost) would enable profound changes to the income statement. Revision cycles could be lengthened, sampling and selling costs reduced, and the percentage of recurring revenue increased substantially.

For several years, the potential of such changes have been obvious to industry executives and observers. Why then would the new owners be better able to institute these changes and transitions? The answer is simple, the short term costs of technology investments coupled with the transition to a recurring model would produce some “difficult quarters” for a publicly traded company. The opportunity to retool and restructure while private could create a company that would have excellent recurring revenues and better margins when reintroduced to public markets in a few years.

Should Thomson (and possibly Houghton-Mifflin) adopt this strategy, the impact on the rest of the industry could be profound. However, if these changes were to take place, authors, students, universities, and the publishing companies would eventually all be winners! Here’s hoping that this deal lends impetus to this industry transition.

The News in Retrospect

When I was much younger, I lived in Upstate NY and was vexed by a certain Gannet Newspaper whose news wasn’t particularly current. I always said that their motto should be “the news in retrospect”.

Now I do some writing in the form of this blog and am embarrassed to admit that my report on the recent Gilbane Conference in SanFrancisco would be covered by the same motto. Age makes us humbler with every passing year.

I was very pleased with the quality of presentations in this year’s Publishing Track. In his recent post, Thad McIlroy was much too modest in his depiction of his impressive Future of Publishing Website. The result of almost 10 years of hard work, the site is a fascinating compendium of past and current views of the future of publishing. It is impressive in its scope, organization, and innate wisdom. We were honored to have it released to the public at our conference.

Thad did his usual outstanding job in leading a panel that gave a crisp and concise view of what is possible today in the world of publishing automation. As publishers, Thomson and O’Reilly distinguished themselves with the processes they are using today and products that resulted from those processes. Their willingness to completely rethink their strategies and re-engineer their processes should prove an inspiration to other publishers.

As you can see from my previous post on We are Smarter than Me, I am very interested in activities at the intersection of communities and publishing entities. Our Panel with representatives of San Diego Union Tribune, MERLOT, and Leverage Software gave vivid examples and insights as to how communities can develop valuable new information or enhance traditional information products. Their talks further fueled my curiosity and thinking on this topic.

Bill Rosenblatt led a great Panel of representatives from Adobe, Mark Logic, Marcinko Enterprises, and Quark through an excellent discussion of how today’s technology can enable publishers to design and implement processes that support true cross media publishing. And then Bill shared the lessons that were learned in an innovative cross-media strategy project that he did with Consumer’s Union. He was joined by Randy Marcinko who cited several clear examples of how the proper processes support cross media publishing and By Chip Pettibone Safari U’s Vice President of Product Development who dazzled the audiance with some of Their new products and business models . Their Rough Cuts and Short Cuts product lines are particularly impressive!

Finally Thad’s posting speaks glowingly of the panel for the International Publishing panel. I concur!!
Thanks to all conference panelists and attendees!! Please send me any comments and critiques that would make the next conference more valuable to you.

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