Digital was the way to go in educational publishing, and a small publisher could not reach the heights in that bright future without growing. And so Barry O'Callaghan took Riverdeep Publishing and made it bigger and bigger and bigger until it burst. He sucked up too much debt as he swallowed Houghton Mifflin and Harcourt and all the other little publishing fish. All that debt drowned the little minnow that became a dying whale.
|Barry O'Callaghan in happier times|
Synergies and reconstructions and reconfigurations propped up what was left, and Houghton Mifflin Harcourt emerged from the rubble. More nimble, a lean and mean swimming machine, HMH is now looking at the banquet table loaded with acquisition targets and finding a snack to its liking. Not dining in excess, having learned its lesson, but HMH is looking at growth because....because digital publishing in educational materials is the future of educational materials publishing.
Just like Barry O'Callaghan knew when he first started to realize his dream. He had the right idea, but unfortunately could not execute the plan in the face of a crashing equity market. Right idea, wrong place, wrong time.
HMH has picked up a few small digital operations that use the Internet to deliver content. A website for the primary level and a technology company are now part of HMH as it expands further into the digital area. School districts are on tight budgets, and they can't afford to update their textbooks every year or two. But they can manage an upgrade on digital content, which costs less than thousands of hardcover books. In addition, digital content can be changed with a keystroke. No waiting around for a delivery, and then having to pay someone to unpack and sort. The convenience alone would have an impact even if lack of financial resources was not an issue.
HMH's Linda Zecher, brought in from Microsoft to run things, has recently stated that digital educational publishing provides half of the revenue from educational publishing, and the education end of the business accounts for 85% of the business. That's a big chunk of the profits arising from the digital end. Barry O'Callaghan saw that coming, but his timing was off.
Digital is on the rise in educational publishing. More and more students are using tablets to store their books, instead of an over-filled backpack. Kids are becoming accustomed to using electronic devices, and there will not be a big push to go back to the old days of dog-eared textbooks. Electronic learning is growing and will continue to grow, fed by expectations of a wireless society.
Barry O'Callaghan had the foresight. He still has the dream.
Beanstalk Innovation is his new baby, a small tech firm that has a contract with the state of Georgia in the US to provide digital educational materials for an American history course, along with English language instruction for Puerto Rican schools.. As the CEO, instead of the owner, he has fallen a step or two down from the glory days, but he intends to bring English language coursework to students around the globe, all through the wonder of the Internet. With success in that niche, he plans to rebuild Riverdeep and work his way back, the little minnow once again swimming in the digital sea and swallowing up whatever small fry come its way.
Could a re-acquisition of HMH be a part of his strategy?
Employees of HMH, those not lost to the realization of synergies, are very much hoping the answer to that question is a solid "No".