The British publishing house Pearson plc announced on December 28, 2012, a strategic investment in NOOK Media, LLC, the new company founded by Barnes and Noble and Microsoft that consists of Barnes & Noble's digital businesses including its NOOK e-reader and tablets, the NOOK digital bookstore and its 674 college bookstores across the U.S. Pearson is investing $89,500,000 in cash in NOOK Media, gaining a 5% equity stake.
In the wake of this transaction, Barnes & Noble, Inc. will own approximately 78.2% of NOOK Media and Microsoft will own approximately 16.8%. Pearson may earn the option to purchase up to 5% more stock in NOOK Media.
Pearson stated this “strategic investment in NOOK Media will help accelerate customer access to digital content by pairing the company’s leading expertise in online learning with NOOK Media’s expertise in online distribution and customer service. This will facilitate improved discovery of available digital content and services, as well as seamless access.”
On October 3, 2012, Pearson announced that Marjorie Scardino has decided to step down as Pearson’s chief executive at the end of 2012 and John Fallon would succeed her effective on January 1, 2013. Fallon immediately joined the Pearson board with immediate effect.
Marjorie Scardino was appointed chief executive of Pearson on January 1,1997. She led Pearson’s transformation from a diverse conglomerate (the owner of Madame Tussauds, Thames Television, and Westminster Press, with stakes in BSkyB and Lazard as well as Penguin, the Financial Times and Pearson Education, amongst many other things) “into the world’s leading learning company,” as Pearson describes itself. [1]
Today, Pearson publishes textbooks under the following imprints: Scott Foresman, Prentice Hall, Addison-Wesley, Allyn & Bacon, Benjamin Cummings and Longman. They also produce digital learning programs and provide schools, companies, and professional bodies with test development, processing, and scoring services.
The Financial Times Group publishes the Anglo-American neo-liberal newspaper Financial Times, as well as specialist financial magazines. The Mergermarket Group, which is part of the Financial Times Group, publishes specialty financial magazines and produces digital media. The Financial Times Group has a 50% ownership stake in The Economist Group and has joint ventures with The Wall Street Journal and Sanoma Independent Media in Russia, publishiong the business daily newspaper Vedemosti; and BDFM in South Africa.
The Penguin Group, founded by Allen Lane in 1935, publishes approximately 4,000 titles per year. Penguin publishes both under its own name and the imprints Hamish Hamilton, Putnam, Berkley, Viking, Dorling Kindersley, Puffin, and Ladybird.
During her tenure, sales tripled to nearly £6,000,000,000 and profits grew more than three times to a record high of £942,000,000 in 2011. At a time of profound change in the media and publishing industries, she oversaw the successful movement of the company from traditional print publishing businesses to digital and services businesses. Last year, Pearson expected to generate more than half its revenues from digital and services businesses for the first time in its history.
John Fallon, aged fifty, has been chief executive of Pearson’s International Education division since 2008 (and before that he was chief executive for Europe, Middle East and Africa since 2003) and is responsible for education businesses outside North America, including in fast-growing markets such as China, India, Brazil and Southern Africa. With more than 15,000 people in seventy countries, this division is fundamental to Pearson’s growth strategy. Under John’s leadership, International Education sales have increased from £322,000,000 to £1,400,000,000 and profits from £12,000,000 to £196,000,000 in the past decade.
Fallon joined Pearson in 1997 as Director of Communications. In 2000, he moved to New York City to take on additional responsibility as President of Pearson, Inc. in New York. In 2003, he was appointed CEO of Pearson's education businesses for Europe, Middle East & Africa (EMA) and since then has gradually taken on a broader international education brief.
Before he joined Pearson, Fallon was Director of Corporate Affairs and a member of the Executive Committee at Powergen plc. Earlier in his career, John held senior public policy and communications roles in local and national government. He graduated from Hull University in 1983 with a degree in economics, politics and sociology.
Pearson Chairman Glen Moreno stated, “Under Marjorie’s leadership, Pearson has fundamentally shifted its business portfolio towards all kinds of learning, its geographic exposure towards fast-growing economies and its product mix towards digital and services. It has been a radical and highly successful transformation. I know that many of Pearson’s shareholders, customers and people will join me today in applauding her enormous contribution to the company.
Moreno added, “John is an experienced and effective leader who has planned and led the tremendous growth of our international education business over the past decade. He is an outstanding executive to build on Marjorie’s many achievements.”
New Pearson CEO John Fallon stated, “Marjorie’s legacy is a company with a strong performance record, a deep commitment to its wider social purpose and a unique culture. I am proud to be part of the company; it is a tremendous honour and responsibility to be asked to lead it.
Fallon added, “Pearson has a clear position of leadership in global learning and publishing, with strong foundations for growth in technology, services and developing economies. Our challenge is to seize those opportunities in an era of tremendous industry change.”
Marjorie Scardino stated, “For more than 160 years, Pearson has stood for integrity, quality and business strength. It has been a privilege to be part of such a great company for a small part of its history.”
“Though we’ve changed the company beyond recognition from its form in 1997,” Ms. Scardino added, “we are still in the foothills of the climb to make all kinds of learning more accessible and more effective for more people. I know that John, the board, the senior team and our 40,000 people have the bravery, imagination and decency to lead the company to new ways of achieving these goals, while holding on to the traditions and values that make Pearson unique.”
On October 29, 2012, Pearson and Bertelsmann announced they had agreed to merge Pearson’s Penguin Group and Bertelsmann’s Random House, which is the largest publisher in the U.S. and U.K., as a joint venture, Penguin Random House. Bertelsmann will own 53% of the joint venture and Pearson will own 47%.
The agreement excludes Bertelsmann’s trade publishing business in Germany (the original part of the company). Pearson will also retain the right to use the Penguin brand name for education products worldwide. Under the agreement, Bertelsmann will name five directors to the board of the joint venture Penguin Random House, and Pearson will name four.
In 2011, Random House reported revenues of €1,700,000,000 (£1,480,000,000) and operating profit of €185,000,000 (£161,000,000). Penguin reported revenues of £1,000,000,000 and operating profit of £111,000,000 with total assets of £1,000,000,000. Pearson stated, “After completion, Pearson will report its 47% share of profit after tax from the joint venture as an associate in its consolidated income statement.”
Neither Pearson nor Bertelsmann may sell any part of their shareholding in Penguin Random House for three years. Marjorie Scardino, then-chief executive of Pearson, stated, “Penguin is a successful, highly-respected and much-loved part of Pearson. This combination with Random House – a company with an almost perfect match of Penguin’s culture, standards and commitment to publishing excellence – will greatly enhance its fortunes and its opportunities. Together, the two publishers will be able to share a large part of their costs, to invest more for their author and reader constituencies and to be more adventurous in trying new models in this exciting, fast-moving world of digital books and digital readers.“
Thomas Rabe, Chairman and CEO of Bertelsmann, stated, “With this planned combination, Bertelsmann and Pearson create the best course for new growth for our world-renowned trade-book publishers, to enable them to publish even more effectively across traditional and emerging formats and distribution channels. It will build on our publishing tradition, offering an extraordinary diversity of publishing opportunities for authors, agents, booksellers, and readers, together with unequalled support and resources.”
[1] Marjorie Scardino is also Chairman of the MacArthur Foundation, Vice Chairman of Nokia, and a director of Oxfam. In 2003, Queen Elizabeth II made her a Dame of the British Empire. Seven years later, Ms. Scardino was named a fellow of the American Academy of Arts and Sciences. Before she joined Pearson, Ms. Scardino was chief executive of The Economist Group. A lawyer, she was a partner in a law firm in Savannah, Georgia and, with her husband, founded The Georgia Gazette, which was awarded a Pulitzer Prize in 1984.
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