Pearson, Biggest Textbook Publisher, Pushing Students To Ebooks You Can't Resell (PSON.L)

Combining a couple threads from days gone by. Do you, or don't you, own what you've paid for?
And one of the best market calls ever.
From Newsweek:

"Over half our annual revenues come from digital sales so we've decided, a little bit like in other industries like newspapers or music or in broadcast, that it is time to flick the switch in how we primarily make and create our products," Pearson plc CEO John Fallon told the BBC.

The move is a doubling down of sorts for Pearson, which made a major investment in higher education courseware (HECW) in the United States, but still suffered a five percent drop in revenue in 2018. Pearson funded the transition to digital textbooks, online coursework and subscription models in part with high-profile sales of subsidiary companies like the Financial Times and the Economist.

Pearson's new strategy for speeding adoption of digital textbooks is to stop updating print textbooks, leaving them to grow more obsolete against ebook alternatives. The typical textbook is revised every three years, with Pearson releasing new editions of approximately one-third of its 1,500 titles every year. Now, rather than 500 new print editions a year, as in 2019, Pearson will only update 100 textbook releases annually. Contrast that with ebook textbook releases, which will be updated on a rolling basis, like video games....MUCH MORE

John Deere has been the evil face of the "right to repair" question i.e. did you actually buy what the manufacturer says "No you were just leasing the software" which question was partly answered in a U.S. Supreme Court ruling against a textbook publisher that we've highlighted over the years. Here's a 2018 iteration:
"The Right to Repair Battle Has Come to Silicon Valley"

You didn't thinks all those posts on John Deere and "Kirtsaeng v. John Wiley & Sons, Inc." were simply about tractors and textbooks did you? I mean, sure they were, but they were also about whether you own the stuff you buy and if the Supreme Court would uphold the First Sale Doctrine.

And on Pearson:

Possibly The Funniest (Profitable) Stock Recommendation of All Time (PSON)
Paul Murphy now heads up the Financial Times' FT Investigations but can still be seen at FT Alphaville from time to time.

Originally posted Dec. 30, 2015 as:

Possibly the Funniest (profitable) Thing We Saw In 2015: FT Alphaville's Founder/Editor Channels Mr. Subliminal 

Then updated on January 18, 2017 with this:

-from Bloomberg's Tracy Alloway (formerly FT Alphavillein)

Original post:
For our younger readers, here is Mr. Subliminal on Donald Trump cheating on his wife Ivana in 1990:

                                                              Comedian

And here's FT Alphaville's editor, Paul Murphy,

 

Hard-bitten journalist

on former FT Alphaville owner Pearson and its stock, Dec. 1, the day the Financial Times was handed over to Nikkei, while appearing to be having a normal conversation with Alphavillein Bryce Elder:

...PM

(So here’s our advice on the stock at 832p….)

PM

( Run )

BE

...Today, though, the message is dovish. So we’re all choosing to forget about 2016.

PM

( Scarper )

PM

( Get out )

PM

( Bin it )

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PM

( You don’t think another profit warning is coming? Oh course another profit warning is coming! )

--------
PM

( And I can tell you it’s a screaming sell. )

--------

PM

( I can tell you what happens next…)

PM

( Having focused the business down and down and down so that it’s pure corporatised education…)

-------
PM

( And with corporatised education, er, falling slightly out of fashion…)

-------
PM

( The next effort will be to slash costs — slashing with a blunt knife. A panic. )

-------
PM

( My guess is 15 per cent of the workforce will go. )

-------

PM

( Across the board. )

PM

(except not in the boardroom, of course )

PM

(It’s a lucky escape for us, cos the 15 per cent cut would have hit us as well. 100 journo jobs would have gone. )

BE

Is that enough on banks? Actually, Goldman too. Just because.

--------
--------

PM

(If you look back to the late 90s, the FT had all the bits to construct Bloomgerg. )

PM

( Had a world class consumer offering in the form of the paper )

PM

(But it also had a newswire, and an online markets business — Market Watch.)

BE

Should we move on to other matters?

11:22AM

PM

(It had data, in the form of IDC)

PM

(Had Extel. Had what became factiva.)

PM

(Had a huge EM news business.)

BE

Okay …………. I think I have to do a quick bit of de-RAW here.

--------

BE

Coincidentally, we were chasing the same story from a slightly different angle.

BE

The rumour that reached us was that National Grid was working on a bid of around $45 a share for ITC …

PM

(People here complained of a lack of investment from Pearson. Investment??? They were sucking the life-blood out of the thing. )

BE

… However, that would all appear to be very, very premature..

---------

BE

… However, that would all appear to be very, very premature..

BE

What we can say with some confidence is that National Grid’s in the ITC auction process, which kicked off a week ago …

BE

But NG only appointed a new CEO at the start of the month, and is in transition between the old guy and the new guy for the rest of the year.

BE

And NG’s balance sheet doesn’t make ~$7bn-ish deals look very easy.

BE

So. If National Grid’s involved …

BE

… It’s much more likely to be in there to look at the numbers of a rival, rather than to launch an offer.

PM

(Sure, there was one short period, during the dot comedy, that the FT was allowed to expand. It was a disaster, timing wise. But Pearson made up all the associated losses with one disposal — Market Watch. That covered everything.)

BE

Also, note, there’s no shortage of potential bidders. It’s a crowded process.

PM

(Anyway, ive said enough. We’re under new ownership now. )

PM

( Sell Pearson )

BE

Also likely to be in there are Berkshire Energy, Iberdrola’s Avangrid, Hydro One, NextEra Energy, American Electric Power ….

...MUCH MORE

The stock is currently trading at 739p, down 11.17% so far this month, after trading under 700 a couple weeks ago.... 

Updated stock price, January 18, 2017:

583.50 GBX down 224.50 (27.78%) on the day.

And FT Alphaville's latest commentary on Pearson.