Pearson Mulls Selling US K-12 Business to Further Slash Costs


Pearson Mulls Selling US K-12 Business to Further Slash Costs

May 8, 2017

BOOKS ON THE BLOCK: One of Pearson’s bread-and-butter businesses—U.S. K-12 courseware—may be the next item on the chopping block.

The is the latest in a string of assets that the beleaguered company is trying to shed. The publisher sold The Financial Times and its stake in The Economist in 2015. It’s still looking for buyers for Penguin Random House. Last year the company also said it would exit the learning management system business.

“As part of the ongoing simplification program, Pearson is also announcing a strategic review of its US K-12 courseware business,” reads the company’s press release. “This business displays a slow pace of digital adoption, so a review is underway to explore whether it fits with the broader company strategy.”

This admission deals a blow to the vision that CEO John Fallon, and his predecessor Marjorie Scardino, held for transforming Pearson into a digital empire.

The statement adds that “the future focus in [U.S.] K-12” will be Pearson’s virtual schools business (Connections Education), digital assessments, and courses for online learning. That last piece, the company recognizes, is a “market [that] is still in infancy but, in time, it will grow as schools finally realize the full digital potential of personalized learning.” That’s an assumption equally fraught with risk as, say, Pearson’s costly bet on transition from print to digital courseware.

Through recent textbook partnerships with Chegg and IndiCo, Pearson now appears inclined to rent—rather than sell—its higher-ed print offerings.

Selling the K-12 courseware business would be part of a grander plan to cut £300 million (approx. US $388 million) a year by 2020. Shareholders appeared to revel at the announcement, as Pearson’s stock on both the London and New York exchanges shot up more than 10 percent afterwards. Yet these cheers may be short-lived: “For the next year or two we think the negatives will continue to outweigh the positives so we are running the business on the basis that things will not get better any time soon,” Fallon told Reuters. More job cuts are expected along the way.

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