How did Pearson become the biggest of the big beasts

01.01.70 | Philip Jones

It is suitably ironic that in the week its subsidiary Penguin announces the biggest UK jobs cuts seen so far among the top trade publishers in this recession, Pearson should be revealed as the largest global books publisher.

The company’s ascension to the throne, though, has less to do with its London-based book publisher, and considerably more to do with the decision to focus on education.

When Marjorie Scardino was made chief executive of Pearson in 1997, the education business had sales of £563m. In its last financial year it had sales of £3bn—not simply six times bigger than 11 years ago, but 25% bigger than the whole of Pearson. In the same period Penguin’s sales have risen from £525m to £903m.

Pearson Education’s growth has been driven by strategic, and really quite impressive publishing acquisitions. First the educational businesses of Simon & Schuster in 1998 and then in 2007, Harcourt Assessment and Harcourt Education International from Reed Elsevier.

Digitisation is also a factor. In 2000 it paid $2.4bn (£1.5bn) for National Computer Systems (NCS), an educational testing and data management company in the US, followed in 2007 by eCollege, a provider of eLearning and enrolment services, for $477m (£297m). It was little wonder, therefore, that when California governor Arnold Schwarzenegger proposed replacing school textbooks with e-books, Pearson responded by saying it was ready to develop an online delivery system. It has been planning for this.

Pearson is not the only publisher to have recognised that the delivery of content via a digital medium was likely to be an important consideration in future growth.

Each of the top four publishers—Pearson, Reed, ThomsonReuters, and Wolters Kluwer—now boasts an impressive digital portfolio, aimed either at the educational, professional or STM markets.

What they don’t boast, Pearson notwithstanding, is a trade publisher. In fact, there are just six trade publishers among the top 15 players in the ranking.

But, had the list been compiled 10 years ago, would it have looked different? Reed and Thomson would have been near the top but chances are that Bertelsmann would have come out the winner, with Simon & Schuster (or Viacom as it was then), HarperCollins and Pearson also vying for a top five finish. Trade publishing would have been better represented, but not by much.

Even so, the next 10 years are going to be pivotal for consumer publishers. At some stage in the future, the digital exploitation of published entertainment content is going to hit the big time, either via Amazon or Google. A re-shaped Penguin could also play a part, with Scardino’s sometimes criticised decision to hang on to Pearson’s trade book business perhaps finally starting to pay off.

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