In depth: HMH c.e.o. Linda Zecher

In depth: HMH c.e.o. Linda Zecher

Whatever doesn't kill you makes you stronger, the saying goes. When Linda Zecher took over as c.e.o. of Houghton Mifflin Harcourt in autumn 2011 the company may not have been in its death throes, but it certainly was ailing.

HMH was carrying debt to the tune of $3.1bn, the result of the two acquisitons five years ago by its former parent group, Dublin-based Riverdeep (later renamed Education Media), which created the current group. Zecher’s first year has been one of restructuring and leading the company into a “pre-packaged” Chapter 11 bankruptcy in May this year, which it emerged from 32 days later.

The result, says Zecher, is a new, stronger HMH. “We’ve done a lot of good things this year, but the most important has been the restructuring of the company. We literally have no debt except for the debt we put on the books for the opportunity to borrow against. We probably have the cleanest balance sheet of any educational publisher in the business. We are back in business in a big way.”  

It is perhaps too early to assess the financial impact of the bankruptcy restructure; the most recent results are from HMH’s second quarter of 2012, which includes the May/June period in when it was undergoing Chapter 11. But sales have risen against the same period in 2011, up 5% to $344m for the quarter. The education division, which accounts for 90% of HMH’s revenue, saw sales jump 6% (to $313m) for the period.

With the bulk of the restructure completed, Zecher is looking forward. “We’re positioned well for growth and acquisitions. We’re moving quickly into leveraging our content with technology and strategic partnerships. There are some acquisitions we could make with small technology companies that can really support us in the education space, and we want to be able to do that.”

Common cause
Before taking the reigns at HMH, Zecher spent over 25 years with various technology companies—most recently at Microsoft, where she was corporate vice-president of the software giant’s World Public Sector business. WPS is an $8bn-a-year department overseeing Microsoft’s partnerships with governments and educational institutions.

“Part of the reason I came to HMH is that I had already been involved in education and the delivery of content digitally with Microsoft,” explains Zecher. She describes the ongoing digitisation in the education sector as “a dimmer switch rather an on/off button”, and also warns that there are a number of practical concerns about digital growth even in mature markets.

“Digitisation is obviously the way the market is going. But you have schools and academic environments that can’t absorb all content digitally. Even in a country like the US, you still have issues with school budgets, infrastructure, wiring in schools and bandwidth,” Zecher says.

The recession has had a huge impact on the US education sector—though Zecher says HMH has retained its market share—with state and federal budgets being hit very hard. Yet Common Core, a new set of standards which will be rolled out in 49 of the 50 states (all except Texas), has been a boost. Zecher says: “Common Core is a driver right now. Teachers and schools are getting ready and they have to acquire content—it’s a new methodology around teaching, so you can’t just wait until 2014. You need to train and educate teachers now.”

Trade crossover
An education powerhouse, HMH’s pedigree dates back 180 years to more humble origins—it was originally a publisher of fiction and philosophy by authors such as Nathaniel Hawthorne, Henry David Thoreau and Ralph Waldo Emerson.

The trade side, which accounts for about 10% of the overall group revenue, still has that upmarket, reading-group flavour—it publishes Audrey Niffenegger, Amos Oz, Robert Stone, former US poet laureate Donald Hall, and is the US publisher for Emma Donoghue, Jeanette Winterson and J R R Tolkien. But it’s not all high-falutin’: its big autumn celeb memoir is from country music star (and father of Miley) Billy Ray Cyrus; the cookery list includes US TV chefs Jacques Pepin and Kathleen Daelemans; and the children’s brands include Curious George and Lois Lowry.

Whilst fellow education giant Pearson looks to shed a good part of its trade business through the Random House merger, Zecher says that her trade group is an integral part of HMH, not least because of its crossover with other parts of the business. “We are leveraging our trade publishing more than we ever had before in the education space. There is a wealth of content we can take from the trade side which we can repurpose as supplemental material for students and parents. [Trade publishing] is more important than ever for us.”

She does caution that HMH, and the book industry in general, needs to be nimble and change with its customers. “If you look at the traditional publishing market, books aren’t that exciting to kids anymore,” she says flatly. “Other media is competing with us . . . I look at my own granddaughter who is two and a half and already using an iPad. When she goes into a classroom in a few years a print book is going to be boring. So I’m glad of the opportunity to take my technology background and leverage it with our great content. That’s the reason I came here. I look at the industry that is ripe for change and it is a question of how quickly we can go.”

HMH timeline

Boston-based Ticknor & Fields launches with writers including Ralph Waldo Emerson, Henry David Thoreau and Nathaniel Hawthorne

Ticknor & Fields merges with long-time printers Riverside Press, owned by Henry Oscar Houghton and George Mifflin. Ticknor & Fields is renamed Houghton, Mifflin & Company

HM becomes publicly listed

HM acquires education publisher McDougal Littel   

HM acquires education publisher D C Heath

HM acquired by French media firm Vivendi

Vivendi sells HM to private equity firms Bain Capital, Thomas H Lee Partners and The Blackstone Group

Riverdeep completes its merger with HM, creating HM Riverdeep. HMR then acquires Harcourt Education divisions from Reed Elsevier to create HMH

Recapitalisation and restructure of HMH, reducing debt to $3bn

HMH enters Chapter 11 bankruptcy, and emerges 32 days later