Cengage and McGraw Hill To Merge

In 2013, Cengage entered into Chapter 11, and by 2014, they’d emerged with US$4 billion less debt, and a significant chunk of new investment. Cengage CEO Michael Hansen [who will lead the combined business] used his bankruptcy as more than a way to jettison debt—he radically changed Cengage’s entire business, says PW’s Andrew Albanese.

Two of the largest US players in educational publishing announced this week that they are hitching up. On Wednesday, McGraw Hill Education and Cengage revealed an agreement to combine their businesses, reports Andrew Albanese, Publishers Weekly senior writer.

“This is clearly big news—but how big? Well, consider that McGraw Hill Education clocked in at number 10 on the Publishers Weekly list of the world’s biggest publishing companies, and Cengage at number 13,” Albanese says. “Combined revenues for the two companies tally up at over US$3 billion.”

For Cengage, Albanese tells CCC’s Chris Kenneally, “it’s an astounding turnaround. In 2013, Cengage entered into Chapter 11, and by 2014, they’d emerged with US$4 billion less debt, and a significant chunk of new investment. Cengage CEO Michael Hansen [who will lead the combined business] used his bankruptcy as more than a way to jettison debt—he radically changed Cengage’s entire business.”

Last fall, Albanese explains, Cengage announced it was moving to subscription model—Cengage Unlimited. Under the new model, rather than selling expensive textbooks, students now pay one price for access to all of the company’s resources, as well as homework help, quizzes and other add-ons.

“You’ve heard how near-death experiences can make people change their lives, well that’s what seemed to happen for Cengage,” Albanese says.

Every Friday, CCC’s “Beyond the Book” speaks with the editors and reporters of “Publishers Weekly” for an early look at the news that publishers, editors, authors, agents and librarians will be talking about when they return to work on Monday.