Wednesday, October 25, 2006

Thomson Prepares to Shed Its Learning Division to Pump Up Corporate Markets

The Wall Street Journal reports on pending plans at The Thomson Corporation to spin off its Thomson Learning division for as much as USD 5 billion, citing a slow transition to online revenues for this division and an eagerness to concentrate on building up technology assets for its other divisions focusing on legal, scientific and financial markets. It's a good move at a pretty good time, allowing Thomson to attain a more serious position in the corporate content services space. The learning space is different enough that product and technology investments in corporate content would not be easily leveraged for learning efforts, whereas there appears to be a great deal of synergy in the technologies used to support its other efforts.

Academic aggregators in general are facing potentially grim times as universities and schools learn how to aggregate instructional content via new venues that bypass oftentimes the costly bundled electronic course offerings being pushed by publishers. Search engines, online course management systems and user-generated content systems such as Wikis and blogs are all tools that are helping both instructors and students create valuable course offerings at a lower cost to students and institutions. Book-based content is having a hard time transitioning into digital markets in general but with universities and schools filled with "digital natives" that are leaving yesterday's books behind it's going to be an uphill battle for educational publishers for many years to come.

That 5 bil would come in handy to bolster Thomson's offerings in the corporate world, where they offer good content and technology but struggle to deliver the breakthrough services that rivals such as LexisNexis, Reuters and Elsevier are able to conjure up on a regular basis. The scale of this cash could easily lead one to believe that a major acquisition such as Bloomberg could be targeted by Thomson to leap into the lead in finance for overall market position, but with Mike Bloomberg begging off a sale of his privately held company for now one assumes that a good portion of that cash will go into infrastructure and product design - until the next good deal comes along. How now, Dow Jones? Would combining Factiva and Thomson West tickle some fancies in rapidly developing legal and business information markets? Factiva licensing deals with LexisNexis would make this a tricky spinoff, but one that would make sense from a product standpoint.

There are lots of interesting possibilities for this deal but first Thomson must find a suitable suitor for its Learning assets. Moping about its performance is not a great way to start the bidding, but there's bound to be a focused publisher or two - or three - that would be up to cornering more of the market for instructional content products and services. We'll see where the best fit lies soon enough.
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