New S&S/AWL Combo Will Be Pearson Education
Jim Milliot &John F. Baker -- 8/3/98
Move to N.J. headquarters will mean more than 350 job losses at AWL's Reading, Mass., site
The new combined Simon &Schuster/Addison Wesley Longman education business, the world's largest, is to be known as Pearson Education, and will be located at the current S&S education divisions' corporate headquarters in Upper Saddle River, N.J.
The announcement, made July 31 by Pearson plc in London, said that the relocation of AWL's headquarters, which had been in Reading, Mass., would mean job losses for about half the 730 people who work there. Those affected will include corporate services employees who work in the areas of finance, human resources, information services, international business support, operations and order services. Severance benefits and other assistance will be available for affected employees. The transfer of these functions to New Jersey will occur by April 1999 for all groups other than information services, which will be moved later in the year.
The Upper Saddle River location is a 48-acre campus with a 475,000-sq.-ft. facility modernized in 1995. It was chosen, Pearson said, because it has the space and facilities to provide the administrative and corporate services required by the increased business the combined companies will represent. It is also close to the company's dedicated data center in northern New Jersey, which, following the integration of the S&S/AWL shared services projects, will also provide services for Penguin Putnam.
Peter Jovanovich, currently chairman and CEO of AWL, and who will be CEO of Pearson Education when the pending acquisition is completed, said choosing the headquarters venue was a difficult decision, "as it means we will lose valuable and dedicated colleagues."
The plans were announced against the background of further scrutiny of the planned acquisition in Washington. The Justice Department extended its review to a "second request" phase, which could delay approval, but Pearson officials continued to predict that the deal would be completed, as planned, in the fall.
The Scardino Strategy
Pearson's purchase of Simon &Schuster's educational properties "is a bet on education, not books. We're building an educational company, not a book company," Marjorie Scardino, CEO of Pearson, told PW in a recent exclusive interview. Scardino sees education evolving into a high-growth business, not just in the U.S., but in many other parts of the world. "We're talking about education in the broadest sense, ranging from school publishing to professional education and continuing education," Scardino noted. To meet its objective to be a global education company, Pearson "needed a larger infrastructure," a need that led to the S&S purchase.
S&S brings not just size to Pearson, but advanced technology as well, emphasized Peter Jovanovich, who had nothing but praise for S&S's education assets. "They responded very well to what was happening in the market and to where the market will be. They have lots of technology solutions in their higher education division, while Computer Curriculum Corp. represents a new paradigm" in some elementary-grade subjects, Jovanovich said.
Although both Scardino and Jovanovich agree textbooks still provide the basis for most teaching, both also agree that education is being changed quickly by technology. Jovanovich noted that the growth of the World Wide Web increases the ability of publishers to customize materials in a wide range of subjects, and he predicted that college students will continue to buy more and more materials over the Web. "We'll integrate technology and print," Scardino said, "Our job is to please our audience, and not to look at format."
The increased use of technology is coming at a time when more resources are being devoted to education, Jovanovich said. "There is a recognition among politicians that education needs to be a top priority and as a result more money is being spent on materials," Jovanovich told PW, noting that parents are also buying more education-related products for their children. Scardino and Jovanovich also feel that many other countries are becoming more committed to upgrading their educational efforts.
The addition of S&S and the move into education fits in well with Scardino's overall strategy for Pearson, which is to make the company an owner of copyrights. "At heart, Pearson is in the intellectual property business, be it through publishing books or the Financial Times," Scardino said. To help focus, Scardino said Pearson will most likely sell its Madame Tussaud's division.
What Scardino d s not plan to change is Pearson's management make-up, which includes both Jovanovich and Penguin Putnam chief Michael Lynton, who chairs Pearson's intellectual property committee, which looks at how different properties can best be developed. The education and consumer book-publishing segments already share some back-office functions and, where feasible, the two groups expect to share more services, while also looking to see where they can work together. "Where we can cooperate, we do it," Jovanovich said.
The S&S purchase will not only make Pearson one of the world's largest publishers, it will also make the company more American-oriented than ever. After the transaction, more than half of Pearson's revenues will come from North America and over half of its staff will be located in America. Nevertheless, Scardino said she has no plans to move Pearson's corporate offices to the U.S. She noted that the U.K. is a "good platform" from which to run international operations, while Jovanovich added that being located outside of the U.S. gives Pearson "a better perspective about what's going on in the world."
While Scardino makes no apologies for trying to make education as profitable a business as possible, she is also aware that an educational publisher has a public trust. "What we do here matters to us. We know we have a public obligation to fulfill."
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