The Fast-Growing, Cash-Generative Business of Education

I don’t pay much attention to the day-to-day business headlines, especially since reporting in that area is just as bad or possibly worse than what passes for public affairs reporting these days.

But when Pearson, the UK-based educational publishing conglomerate that pretty much runs the Virginia DOE, is the subject, things get a little more interesting.

Evidentially, the company didn’t have a good first half of the year and plans to cut about 4000 jobs. However, it’s this statement from the CEO that really caught my eye.

Pearson is positioning itself as “a global learning services company,” Fallon said in a statement today. “This will drive a leaner, more cash-generative, faster-growing business from 2015.”

And where does all that cash being generated come from? At least half is from public schools, of course.

Pearson is the largest company in the fast-growing business of standardized testing, both writing and scoring the exams. Plus study materials to help teachers prepare kids for the tests. And textbooks “aligned” to Common Core or state standards (alignment being a euphemism for test prep).

Even worse, Pearson sees a great deal of potential in “emerging markets”, other countries to which they are exporting American-style standardized testing.

In the end, their bottom line will likely improve in the next fiscal year, even if the quality of learning provided by their customers (aka schools) doesn’t.

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