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Bucks and books

Posted by David Mehegan  December 4, 2007 02:41 PM

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Houghton Mifflin, the local division of HM Riverdeep, the Dublin-based educational software publisher, is selling its college division to Cengage Learning, the made-up, non-word new name for Thomson Learning, which used to be part of Canada-based Thomson Corp., but now is privately held. The price is said to be $750 million. Houghton says the reason for the deal is to concentrate on its core businesses of elementary/high school and trade/reference. The other reason, presumably, is to pay down the $3.4 billion debt Riverdeep incurred last year to buy Houghton from equity firms Thomas Lee Partners, Bain Capital, and Blackstone Group, and the $4 billion more it is about to pay Britain's Reed Elsevier PLC for Harcourt Education.

If you're confused about all those nationalities, welcome to publishing in America. To make it even more confusing, HM Riverdeep announced last week that it is moving its headquarters to the Cayman Islands to enjoy "less onerous" rules than in Ireland on how profit is defined. The Caymans weather is nicer than Dublin's, too.

College publishing has been a less promising branch of educational publishing, compared with public-schoolbook publishing, than it used to be for several reasons. College is more labor (read: cost) intensive. In school publishing, Houghton might market a math book to a whole state -- Texas, for example -- and if it lands the "adoption," might reap a 50,000-book sale -- with no bookstore-middlemen. In college, books are marketed to individual professors in hundreds of colleges. That takes many calls and visits by many sales reps, with perhaps a few dozen buys per professor, and bookstores getting their cut. Also, with all sorts of self-publishing technologies, professors today can produce a lot of their own teaching materials. Finally, the college business has taken a public and political beating over what many perceive to be inflated prices. Even as development costs go up, it's hard to raise prices in today's climate.

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