Critics Warn Mergers In Textbook Industry Could Hurt Quality
The consolidation of the textbook-publishing industry, a development viewed with growing alarm by some educators, took another step forward in November with the announcement by Time Warner Inc. of its intention to sell Scott, Foresman and Company.
The $455-million sale will transfer ownership of the nation's sixth-largest school publisher to Harper & Row Publishers Inc., a firm best known as a trade-book and college-textbook house.
Critics warned that the deal represents the continuation of a trend that could result in fewer options and less innovation in educational materials.
Because of the mergers and buyouts that have swept through the field over the past few years, industry officials said, the number of publishers producing major basal series in key subject areas has been cut in half. This trend reduces competition and may result in greater homogeneity among the materials, critics warned.
Moreover, they contended, the buyouts threaten the quality of textbooks by moving decisionmaking farther away from those intimately involved with educational materials.
Gilbert T. Sewall, director of the American Textbook Council, a group that reviews social-studies materials, said that, increasingly, textbook companies are becoming "subjugated" to "worldwide communications firms more interested in MTV and Nintendo games than Thomas Jefferson and quadratic equations."
He added, however, that such trends may not be as ominous as some observers fear.
"I am not apocalyptic about the current scene," Mr. Sewall said. "Lest we forget, in an oligopoly--which this is--there is room for excellence. It's not as though a shrinking number of companies means lower quality."
In addition, he and others pointed out, the concentration in the major basal market has opened opportunities for smaller firms to compete for "niches," such as supplemental materials and textbooks for particular grade levels.
"I have always believed and still believe that there is opportunity for small publishers," said J. Kendrick Noble, an industry analyst for PaineWebber Inc.
The sale of Scott, Foresman comes at the end of a year marked by a flurry of mergers, acquisitions, and rumors of takeovers in the industry.
In the largest such deal, Macmillan Inc. agreed to combine its precollegiate textbook operations with the McGraw-Hill Book Company, and then bought the Charles E. Merrill Publishing Company. The new entity, known as the Macmillan/McGraw-Hill School Publishing Company, is the largest school publisher in the nation.
The Scott, Foresman deal came as little surprise on Wall Street, according to Mr. Noble.
Although Time Inc. had bought the publisher in 1986, officials there began to signal their intention to sell it as early as two years ago, he said.
"They didn't understand exactly what they bought," he said. "They had second thoughts."
The pressure to sell grew this year, the analyst added, when Time merged with Warner Communications and decided to "change their corporate strategy to focus on entertainment, rather than information."
In a statement, Time Warner officials agreed that textbook publishing was not a "core business" for the communications giant.
Harper & Row officials, meanwhile, said the company welcomed the deal as a chance to return to the school-textbook market, where it was active a decade ago.
"I am especially pleased with the acquisition because it rounds out the Harper & Row educational-publishing program with a premier name in the field," said George Craig, the company's president.
Because of Harper & Row's limited position in the elementary and secondary market, the deal is unlikely to affect the number of materials available.
But the mergers that have occurred so far have already sharply reduced the number of firms producing major series, noted Daniel Chernow, chairman of California's curriculum-development and supplemental-materials commission.
For example, he said, Macmillan and McGraw-Hill had in the past each published social-studies textbooks. But the combined firm is expected to submit only one series for adoption in California next year.
"They are not going to compete with one another in a subject area," he said. "From a business standpoint, that makes sense. From my standpoint, that's detrimental."
Such reduced competition, added Eugenie C. Scott, executive director of the National Center for Science Education, which publishes reviews of science textbooks, could also lead to "more homogeneity."
"There already is so much," she said. "In biology, there are so many clones of Holt's Modern Biology, because it's the best seller."
Moreover, said Donald A. Eklund, vice president of the school division of the Association of American Publishers, the high cost of producing a big basal series--a reading series can cost as much as $50 million--makes it unlikely that small firms will take up the slack.
"You still have plenty of choice," he argued. "Instead of 10 or 12 firms competing, you have 6 or 7."
In addition, Mr. Sewall pointed out that the textbook industry is not like the automobile or tobacco industry, where a few large firms dominate the entire market. Although the top 10 textbook companies control about 70 percent of the market, he said, "there are still opportunities at the high-school and junior-high-school level for good products coming from smaller firms."
Mr. Chernow said he would welcome submissions from smaller companies for textbooks for certain grade levels.
"We'd love to have a great series for grades 5 and 8 [U.S. history] or 6 and 7 [world history], or K-3," he said.
In addition to reducing competition, critics have charged, the mergers and buyouts have forced publishers to focus on maximizing profits, rather than improving educational materials.
"What you hear," said Harriet Tyson, author of A Conspiracy of Good Intentions: America's Textbook Fiasco, "is that the people running companies who used to spend their time looking after development are now spending their time fending off takeovers and writing memos to their corporate bosses."
In some cases, the takeovers themselves have limited publishers' ability to produce new products. Harcourt Brace Jovanovich, the second-leading textbook publisher, incurred a $2.5-billion debt and suffered a steep drop in stock prices fighting off a takeover attempt in 1987 by the British publisher Robert Maxwell.
To raise cash, the firm this year sold its theme parks--Sea World, Cypress Gardens, and Boardwalk and Baseball--to focus its energies on its publishing and insurance businesses.
In other cases, such as the sale of Scott, Foresman, textbook houses have been swallowed up by larger firms.
These types of buyouts may be harmful, suggested Ms. Scott, because the larger firms, concerned about maximizing profits, may be unwilling to invest funds in risky, innovative materials.
"The production of a textbook is really a work of art," she said. ''A publisher used to publishing mystery novels would not have the same approach to publishing as someone who has been in textbook publishing a long time."
Such dangers, she added, are particularly acute in takeovers involving foreign firms. The role of foreign ownership, she pointed out, became a heated issue this fall when Sony Corporation bought Columbia Pictures.
"There is a real cultural difference among countries," Ms. Scott said. "A British textbook is very different from a Japanese textbook, is very different from an American textbook."
But Ms. Tyson responded that many of the textbook criticisms being attributed to new ownership, such as an emphasis on profits and a reluctance to take risks, had been leveled at the industry before the recent wave of takeovers.
And, noted Mr. Eklund of the publishers' association, regardless of who owns publishing houses, the content of textbooks is generally defined by guidelines in the states and districts that buy materials. Publishers produce what will sell.
"The market is pretty well determined by the regulations of the adopting units," he said. "They still have to meet the demands of the market, which are clearly defined."