Pearson Group

Overview

This profile considers the Pearson publishing conglomerate.

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It covers -

• introduction
• shape
• evolution
• studies

Introduction

UK-based Pearson is a book, newspaper, magazine, television production and information services group.

It originated in the late 19th century as a civil engineering contractor that became a conglomerate encompassing general and financial publishers, merchant banking, Madame Tussauds and Royal Doulton china.

As of late 2000 it had annual revenue of around £4 billion, with an operating profit of £686 million. Most sales come from the US. Pearson has around 30,000 employees based in over 60 countries.

Pearson brands include Australian soap opera Neighbours, children's character Peter Rabbit, leading UK business paper the Financial Times (FT) and Penguin books. In book publishing it is number one in the UK, Australia, New Zealand and India and number two in the US and Canada. It formerly had a 22% stake in major European broadcaster RTL, a Bertelsmann subsidiary.

Shape

An indication of current holdings is here.

Pearson's corporate site is here.

Evolution

Like Vivendi Universal, the Pearson Group began as a civil engineering contractor.

The group dates from 1844. With the collapse of the 1860s railway construction boom UK entrepreneur Weetman Pearson moved overseas. By 1889 the family-owned S. Pearson & Son was building the Hudson tunnel in New York; railways in Spain, Mexico, Colombia and China; dams and canals in Mexico and docks in Egypt and Canada.

In 1901 Pearson entered the Mexican oil business. Its Mexican Eagle oil became the main rival of Standard Oil in alliance with Royal Dutch Shell. Pearson became a peer in 1910 as Lord Cowdray.

In 1919 S Pearson & Son became a holding company that encompassed global civil engineering operations, oil extraction and refining, property and the Whitehall Trust - a corporate finance and investment house. It moved out of contracting in the late twenties and early thirties.

Mexican Eagle was nationalised in the late thirties, resulting in Evelyn Waugh's Robbery Under Law (1939), a commissioned propaganda piece that is probably Waugh's worst book.

Pearson had dabbled in ownership of UK political journals from the turn of the century (see Stephen Koss' superb The Rise & Fall of the Political Press in Britain (London: Hamish Hamilton 1984)), notably through ownership of the Westminster Gazette. In 1920 the group acquired a string of undistinguished but profitable provincial newspapers such as the Brighton Evening Argus and The Oxford Mail, organised as the Westminister Press.

Pearson became a major investor in the London end of the Lazard Brothers merchant bank and took stakes in the 1950s version of dot-coms such as British Overseas Airways.

It gained control of the Financial Times (described elsewhere in this profile) in 1957, with a stake in the Economist, and later bought book publishers Longman (1968) and Penguin (1971) before going public in 1969.

After buying control of Chateau Latour in 1963 it grabbed waxworks and theme park operator Madame Tussauds (1978), the Royal Doulton ceramics group (merged with its Allied English Potteries in 1972) and a diverse collection of general interest magazines in the UK and US. In 1988 it acquired the Les Echos publishing group of France.

It became a major television producer in 1993 with the acquisition of UK company Thames Television, spinning off Royal Doulton into a separate company (worth £113.8m) owned by Pearson shareholders. In 1995 it bought Australian game show and soap opera producer Grundy Worldwide (whose founder subsequently established the RG Capital radio network), selling Westminster Press for £305m in 1996.

In 1997 it added US producer All American Communications and taking a significant stake in UK commercial TV broadcaster Channel 5. In 1998 it bought Viacom's Simon & Schuster education, business & professional and reference divisions for £2.9bn and illustrated book publisher Dorling Kindersley for $466 million.

1998-9 saw major deacquisitions. Tussaud's was sold for $528 million in 1998. The group unloaded its stake in Lazards for £425 million, also getting rid of its computer games arm after a $405 million loss. Macmillan General Reference USA was sold to IDG Books Worldwide for £52 million, Macmillan Library Reference USA to Thomson for £53m, Jossey-Bass to John Wiley for $82 million, medical publisher Appleton & Lange to McGraw-Hill for $46 million, law and tax publishing operations to Thomson for £70 million and Master Data Center to Information Holdings for $33 million. It acquired E Source, a US supplier of energy information, for £11 million, and LearningLab in 2003

Pearson merged its Pearson TV production holdings with the Bertelsmann-controlled RTL broadcasting group: Bertelsmann had an effective 67% of RLT and Pearson had 22%. In December 2001 Bertelsmann acquired Pearson's 22% in RTL.

Pearson sold its stake in Murdoch-controlled UK satellite broadcaster BSkyB to Vivendi for around £305 million and spent £1.7 billion on US educational services group National Computer Systems.

Pearson's Spanish Recoletos newspaper subsidiary was periodically on the market with a valuation of about £1.3 billion. In December 2004 Pearson announced agreement to sell Recoletos through an MBO.

Studies

Most studies of Pearson have centred on Weetman, with a substantial academic literature about the impact or alleged misbehaviour of Mexican Eagle (one of the more unloved oil companies).

For general readers the three key works are Master Builders: Thomas Brassey, Sir John Aird, Lord Cowdray, Sir John Norton-Griffiths (London: Hutchinson 1963) by Keith Middlemas, John Spender's overly-respectful 1930 Weetman Pearson, First Viscount Cowdray, 1856-1927 (New York: rpr Ayer 1997) and Desmond Young's Member for Mexico – A Biography of Weetman Pearson, first Lord Cowdray (London: Cassell 1966).

For Penguin see Penguin Special: the life and times of Allen Lane (London: Viking 2005) by Jeremy Lewis. Other works include Allen Lane, King Penguin (London: Hutchinson 1980) by the founder's son in law John Morpurgo, WE Williams' Allen Lane: A Personal Portrait (London: Bodley Head 1973) and Penguin Portrait Allen Lane and the Penguin Editors 1935-1970 (Harmondsworth, Penguin 1995) edited by Steve Hare. For Longman see Essays in the History of Publishing in Celebration of the 250th Anniversary of the House of Longman, 1724-1974 (London: Longmans 1974) edited by Asa Briggs.

For Grundy see the separate profile on this site and Australian Television & International Mediascapes (Cambridge: Cambridge Uni Press 1996) by Stuart Cunningham & Elizabeth Jacka.

Works on Tussaud's include Kate Berridge's Waxing Mythical: The Life & Legend of Madame Tussaud (London: John Murray 2006).