Cengage and McGraw-Hill to Merge

McGraw-Hill and Cengage, two of the country’s three biggest textbook publishers, recently announced plans to merge, as reported by Goldie Blumenstyk, in The Chronicle of Higher Education.

Here is a key passage:

The textbook market is in a period of rapid change. In recent years, publishers have been squeezed by the used-book and textbook-rental markets, as well as the growth of freely available course materials being developed by organizations in the open-educational-resources movement. Unlike textbook publishers such as Pearson (the biggest) and Wiley, which have diversified into services like managing online programs, both Cengage, which is now No. 2, and McGraw-Hill, No. 3, have stayed focused on the textbook market and moved increasingly toward digital products and adaptive-learning tools, such as the Aleks individualized-tutoring system.

The merger is slated to be completed in early 2020. The new company will take the McGraw-Hill name.

Please read the article for scenarios on how the merger could affect students in terms of pricing and textbook availability.

When corporate mergers occur, a lot of people are quick to suspect creeping monopoly, resulting in rising prices due to lack of competition. However, in the case of textbook publishers, such a move can also be seen as an act of desperation. The companies maintain that their profits will come from increased volume and not higher prices.

There are many controversies, including the “bundling” of learning materials. Students complain that they are forced to buy or rent the whole package, when professors don’t always require every component in the bundle. Also, some observers are concerned that colleges may be compelled to enter into relationships with particular companies to save students money, but this could result in fewer options. Many college bookstores are already affiliated with vendors.

Two developments are important to watch. First, some companies are using subscription models, similar to Netflix in the entertainment area. More significantly, Open Educational Resources (OER) offer free or near-free material to students, and the list of titles is growing rapidly.

There is so much change going on in this area of education that it’s hard to speculate on what things will look like in just a few more years. OER seems to be the elephant in the room, as companies scramble to keep, or enlarge, their share of the market