Publishing in 2009

Over the past few years, leading publishers of STM and educational content have been performing well at an average growth of 5-6%. With major UK and USA publishers rolling out major cost cutting and headcount programs, the impact offshore may not be that gloomy.

The most prominent global publishers are:

Company	Key Focus Segments	Market Cap	Revenues ($ m)
Reed Elsevier (RUK)	STM, Legal and Business [Elsevier, LexisNexis and Reed Business Information]	$8 b	9,155
McGraw Hill Cos [MHP]	Financial and Education	$7.6 b	6,772
Pearson Plc [PSO]	Focus on the Education segment	$7.4 b	8,312
John Wiley [JW-A]	Business and STM	$1.8 b	1,234
Scholastic Corporation [SCHL]	Education and Business	$597.1 m	1,921

These publishers operate in the STM, Educational, Legal and Business publishing segments.

Results for the period ended Dec 2008 are not yet available, but margins are expected to show a decline. In response to the 2009 world economic crisis, publishers are responding by:

• McGraw-Hill - lowered its full-year 2008 earnings forecast down between 11% and 12% and the education segment revenue to decline by 1% to 2%.
• Pearson - base pay rises are restricted to those earning less than £30,000 (or local currency equivalents). A voluntary redundancy/reduction in the work week. Pearson's division. The Financial Times (FT) planning to reduce its staff by 60, mainly from the commercial departments.
• Houghton Mifflin Harcourt - has frozen the acquisition of new titles in its trade division and is restructuring its K-12 textbook division. An estimated 100-200 job cuts out of a total 5,300 full-time employees are expected.
• Scholastic - eliminated about 300 jobs in 2008, implemented a pay freeze for employees earning over $60,000 and eliminated management bonuses. Further cost custs are expected.
• Reed Elsevier - plans to reduce more than 1,000 jobs [mainly outside Britain] to reduce annual costs by £100m.
• Random House - major consolidation layoffs with Simon & Schuster cutting 35 jobs, Thomas Nelson Publishers 54 employees. Independent News and Media (INM) 90 employees by January 2009. The restructuring plan aims to save more than £10m.

Offshore publishing seems more protected from the economic downturn compared to other knowledge segments. Impacts as a result of decrease in US state funding for education or libraries can be expected to drive increased pricing pressures rather than reduction of work.

Overall, these actions will long term result in a stronger, more agile offshore market, providing cost effective services along with innovation in processes, technologies and products.

Reference: Research Paper, "Impact of economic downturn on publishing industry and offshoring."

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