Cengage Learning filed for Chapter 11 bankruptcy protection last week as part of a "restructuring support agreement" to help reduce its $5.8 billion debt.
"The decisive actions we are taking today will reduce our debt and reduce our capital structure to support our long-term business strategy of transitioning from traditional print models to digital educational and research materials," Michael Hansen, Cengage Learning CEO, said in a statement.
In the past, the Company and its peers in the educational materials market produced only traditional print products.
From kindergarten to higher education to career training, students, instructors, and institutions depended on printed goods, typically as an accompaniment to live classroom teaching. The publishers in this market provided textbooks, workbooks, and other instructional materials and relied heavily on their profits from selling new print products.
Now, the educational publishing market has entered the early stages of a major transition from print business models to a greater focus on digital products, with digital market share growing as quickly as 20 percent annually over recent years. The move to digital began with the simple substitution of electronic versions of textbooks for the printed forms. Over time, digital products such as homework programs and interactive learning software have increasingly been paired and integrated with print materials.
And in some cases, digital products are becoming a favored medium for learning materials in the classroom. As much as 15 percent of learning materials sold today are sold in digital format, including course materials, homework programs, and interactive and online learning platforms. All indications are that digital will continue to grow in importance in this market.
More: https://www.documentcloud.org/documents/723898-dk000015-0000.html#document/p4/a108470
By failing to adapt to a changing market, Cengage essentially signed its own death certificate. I don't think that print is dead, but the publishing industry is changing, and fast. Those companies that didn't see the changes coming years ago don't have time to react now, and those that did and had the foresight to adapt to that coming change have and will survive. Blaming a changing market instead of adapting to it is hardly productive. That sort of debt-to-revenue imbalance can not be sustained. Only the government can maintain long-term losses and get away with it (taxpayer bailouts). Companies must maintain profits to compete and survive by serving their customers.
No comments:
Post a Comment