Byron Russell is a Director of Woodstock Publishing and Pete Sharma Associates, as well as being the Joint Coordinator of the IATEFL Materials Writing SIG (MaWSIG). You can follow him on Twitter at @byronofcombe.
A publishing friend called me up the other day, full of concern – “Cengage!” she said. “It’s bankrupt, you know!” Formerly known as Thomson Learning, Cengage was acquired by Apax and Omers Capital Partners in 2007 in a $7.75 billion leveraged buyout from Thomson Corporation. While it is certainly true that Cengage and its wholly owned American subsidiaries have just signed voluntary petitions for bankruptcy in the courts of New York with debts in exceess of 4bn, rumours of the company’s imminent demise are grossly exaggerated.
First, this is debt re-structuring, which is not the same as a write-off. Cengage CEO Michael Hansen: “After we come out of this, we feel we’ll be in a very good position, with a very sound balance sheet, and a lot of room to continue to invest in the business.” Secondly, the petition only applies to US parts of the business anyway. For Cengage operations in EMEA, it’s business as usual. As Hansen says in his open letter to customers, Cengage “maintains substantial cash balances and expects to have positive cash flow, and offices and facilities around the world are serving customers and business partners as usual. (Customers) will continue receiving uninterrupted services, product orders delivered in full and as scheduled, and attentive customer care and support”.
According to senior management, one reason for the current budget imbalance is that too much investment was directed to print at the expense of digital. Under new management, Cengage is focused “squarely on digital” and faculty and student users. Last year, according to publicly-available figures, print accounted for over 80% of the Cengage product mix; by 2018, this will have shifted closer to 50/50. This is going to mean more new investment, wisely spent – and a new raft of innovative digital product across all business segments, including ELT. For the full story and covering documentation go here.
This post originally appeared on woodstockpublishing.co.uk.
2 thoughts on “Cengage – that bankruptcy file”
I have been banging on about this for years. I don’t understand why companies don’t move with the times. Isn’t it basic sense?
Very interesting and precise summary Byron. Let’s hope the ELT part of Cengage will operate successfully in the future. As an outsider, I was (theoretically) considering a while ago whether the merger of Cengage with the National Geographic was a wise decision. However the NatGeo video and image stock truly added some extra value to the coursebooks, it might have significantly influenced (deteriorated) the ROI structure of any new project. To put it in another way: if I invite some friends to a party, no matter how much I love them, I would not bake Swarowski crystals into the surprise cake.