From A Whale To A Minnow

Once upon a time, an Irish lad dreamed a dream of the world's largest educational materials publishing firm.

Barry O'Callaghan parlayed a minnow of a publisher, Riverdeep, into a whale of a publisher that was soon drowning in a deep ocean of debt. What is now known as Houghton Mifflin Harcourt is all that is left of his once mighty empire, a crash diet of redundancies turning the big whale into a skeleton of skin and bones.

Hedge fund manager John Paulson looked over what was left of O'Callaghan's creature and saw something on which to rebuild. A steady diet of sound business decisions was supposed to restore HMH to robust health.

Not unlike the dreamer, Mr. Paulson's eyes turned out to be bigger than his stomach. The good ship Houghton Mifflin Harcourt didn't turn around as anticipated. The overall economy worsened, sales in both trade and education slid in the wrong direction, and the skeletal whale must now be put on yet another diet.

The various divisions that Barry O'Callaghan created by merging multiple publishers are now to be merged into a single entity. Using techniques she likely honed at Microsoft, HMH CEO Linda K. Zecher will pick over the bones in search of scraps of redundant meat that can further shrink HMH in size.

There's nothing left in trade, which had once been put on the market as a going concern when O'Callaghan was desperate for cash. In fact, trade publishing is generating most of the profits, especially now that state governments are so skint that they're not buying new textbooks for their schools.

That being the case, it's the education division that's going to face the sort of cuts that were first instituted by Barry O'Callaghan (although he called them synergies and didn't he do a grand job of realizing them?).

Via mergers and leveraged debt, a whale of a publishing firm was created, and in short order, it proved to be too large to survive. Not unlike the dinosaurs, which grew too big to keep themselves fed.

What was once a whale is reverting to minnow status.

For the hard-working employees who are made to suffer because one man had a dream and another thought he could make it work, the irony is no comfort. Not when HMH anticipates yet another round of redundancies.