51. Pearson plc

Revenues 2020: GBP 3.397 billion (€ 3.780 billion)



British media company Pearson specialises in the publication of economic publications and non-fiction books. The portfolio includes the ‘Financial Times’ newspapers, weekly magazine ‘The Economist’ as well as several educational books publishers.

General Information


80 Strand, London WC2R 0RL, Großbritannien
Phone: 0044-20-7010-2000
Fax: 0044-20-7010-6060
Homepage: www.pearson.com

Branches: Newspapers, magazines, education, books,
Legal form: Public company (since 1969)
Financial year: 01/01 - 12/31
Founding year: 1844

Table I: Economic Performance
Revenues (£ Mio.) 4.5524,7804,5405,1776,1125,8625,6635,6244,8114,2184,423
Operating profit (£ Mio.)635723720736936942857858762634592
Share price (in £, year end)9.9910.3518.4518.2919.5418.8715.8914.059.3114.577.62**

**as of January 9 of subsequent year

Executives and Directors



  • John Fallon, Chief Executive Officer
  • Coram Williams, Chief Financial Officer


Board of Directors:

  • Sidney Taurel, Chairman
  • John Fallon, Pearson
  • Coram Williams, Pearson
  • Elizabeth Corley, Allianz Global Investors
  • Vivienne Cox, BP
  • Joshua Lewis, Salmon River Capital
  • Linda Lorimer, Non-executive director
  • Harish Manwani, Non-executive director
  • Tim Score, ARM Holdings
  • Lincoln Wallen, DWA Nova



S. Pearson & Son started out as a modest Yorkshire construction company in 1844, but the company soon extended beyond the borders of Northern England. The first speciality was the construction of street tunnels under the rivers of London and New York, followed by the construction of railroads all over the world. Successful private entrepreneurs, the Pearsons invested in a wide variety of business: Banks, steel and structural engineering, oil and publishing. When the company went public in 1969, the portfolio already encompassed the regional and local newspaper chain Westminster Press, the renowned ‘Financial Times’ and shares of the large British book publishing houses Penguin and Longman. These prosaic activities were completed by more sophisticated endeavours such as the acquisition of shares of Château Latour’s kingly vineyards and the royal porcelain manufacturer Royal Doulton, which became a victim of the first austerity measures in the 1980s. Ten years on, the Camco Oil Company as well as the last company from the construction division had been sold. Since 1997, the native of Texas, Majorie Scardino makes sure that Pearson bundles its strength and focuses on the company’s core competence - the media business (hence, she swiftly parted with shares of Madame Tussaud’s wax museum once she became head of the company) and has been prioritising the extension of the education segment.

Pearson is the largest international media company that is being lead by a woman. Pearson has been active in the television business since 1990 and became one of Europe’s largest TV production companies by the end of the 1990s, but merged with Bertelsmann’s RTL Group in 2000, a merger that included all the station shares.



Pearson remained an encapsulated conglomerate well into the 1990s, even though this kind of company structure had been outdated for a long time already. Critics tended to portray the company as a dozy and blue-blooded family company, in which the time spent in Eton counts for more than rising up to the challenge of other media companies such as Rupert Murdoch’s NewsCorp. When it was announced that the American Marjorie Scardino would become the new head of the company in October 1996, all signs finally indicated a long-due change of guard. The former journalist of US news agency AP had founded her own newspaper in the USA (as well as run it into the ground) and arrived at Pearson by way of the Economist Group’s American branch. Initially, ‘Marje in Charge’ was considered a tough renovator, who tried to stay in touch with even the most straightforward Pearson employee through daily ‘Dear Everyone’ Emails. She quickly became the ‘Darling’ of London town, increasing both Pearson’s returns and dividend income. For the first five years of the Scardino era, it seemed that the ‘Honeymoon’ would go on forever.

Yet, her goal turned out to be as expensive as it was ambitious. The attempt to make the Financial Times outrun the Wall Street Journal in the race for the leading international economy newspaper as well as the profit drop rippling throughout the whole FT-Group caused by the advertising crisis in 2001, resulted in a growing discontent amongst the institutional shareholders. For years, the Pearson stock has been below par when compared to the important British stock index FTSE 100, which – as irony has it – is established by the Financial Times itself. Scardino, who had been the only female company head in a FTSE 100 dominated by men for ten years, first and foremost defended herself against influential analysts and shareholders’ representatives, who kept urging to push off the ailing FT group. Yet, this would only happen “over my dead body” as Scardino colourfully proclaimed it in 2002.

In February 2005, Pearson subsidiary Pearson Government Solutions was commissioned by the US authorities to process the payment of governmental student loans. The deal, which was extended to ten years after a one-year trial period, had an extent of 430 million Pounds. However, Pearson sold its renamed ‘Pearson Government Solutions’ in December 2006, which also operated the call centres for the national US health program Medicare, to the Veritas Capital investment group for 307 million US Dollars. According to analysts, this surprising step was a definite indicator of the fact that the new chairman Glen Moreno, unlike his predecessor Dennis Stevenson, would play a more pivotal role in the daily business. The Harvard graduate Moreno looks back onto a long and successful career at CitiBank and financial information service provider Fidelity and is the fiduciary of Liechtenstein’s royal family’s assets to this day. He also advised Scardino to keep the focus on the core competencies FT-Group, Penguin and Education.

“Being a genius”, Scardino quotes Thomas A. Edison, “is one percent of inspiration and 99 percent sweat” – and that is why she wishes to continue her work for Pearson. When it comes to the frozen wages of the Financial Times, she proves to be a prime example herself. It is correct to point out that, when compared to 2007, all Pearson board members came home with less money in their pockets and Scardino’s salary was reduced by 275.000 Pounds to a ‘mere’ 2,057 million.

The matter of Majroie Scardino’s successor seems to be firmly settled into her sphere of influence. Rona Fairhead, who moved from her position as second Head of Finance into the CEO seat in summer 2006 is considered the most likely successor of Scardino. A mere 46 years old, she is the youngster at Pearson by a long shot. As a testimonial of her skills, Fairhead is supposed to further promote the renewal of the company’s figurehead brand. Should she be successful, at least such tells the whispering of the voices through London city’s grapevine, she might go on to become the head of the company in a few years time, and most likely sell the FT-Group for a premium price.

Business Fields


Business Information:
The Financial Times Group (FT Group)’s core businesses are the international economy newspaper ‘Financial Times’ and special interest services such as the ft.com website. The portfolio also includes an involvement in the newspaper publisher The Economist Group (50% of the weekly magazine ‘The Economist’ and the associated special interest range). In 2007, the French FT-sister paper, economy newspaper Les Echos, was sold to the luxury company LVMH (Luis Vuitton Moët Hennessy) for 240 million Euros. Pearson parted with its Spanish economy paper ‘Recoletos’ as early as 2004. Biding farewell to the FT partner papers is part of the new strategy that seeks to focus on the English market in the future and focus on Pearson’s venture into the education market.

This includes the sale of the 50 percent-share of ‘Financial Times Deutschland’, which became the property of the former joint venture partner Gruner+Jahr in January 2008. According the business reports, G+J cut a pretty good deal: Apart from a one-off payment over 10 million Euros, another payment of 500.000 for the usage of the FT label is due in 2018. Also, the FTD has to adhere to specific editorial standards as defined by the FT-Group and can continue to access the worldwide network of FT correspondents. In case of non-fulfilment of the contractually agreed standards, the contract allows for Pearson to reclaim the law relating to the use of that name.
Andrew Gowers, who was brought to London in 2002 following the successful founding of the German FT sister to serve as editor in chief, left Pearson on the ground of ‘different viewpoints’ regarding the further development of the newspaper. Gower had aligned the FT with the British market through the addition of a sports page, cultural articles and a weekend magazine. In previous years, the FT struggled to grow in the British market and even lost massive chunks of its readership in 2006. Under the leadership of the new editor-in-chief and former FT-USA head Lionel Barber, the newspaper went back to focussing primarily on ‘pure economy’ in 2006 and emphasised its international character. “The FT does not strive to be a general newspaper anymore”, writes the former Guardian editor-in-chief and media expert Peter Preston: “It features its own special kind of news – and its own special type of reader.” It may still not be the economy paper ‘for the whole word’, Preston elaborates, “but it is as close as it gets”. The newspaper was subject of a relaunch in April 2007 that was first and foremost aimed at the British market. The relaunch was supported with a multi-million Pound advertising campaign under the motto: “We live in Financial Times”. A prior market survey revealed that long-established readers valued the FT for its independence and global coverage, but is deemed old-fashioned and deterring to potential new readers and young British managers.

Despite good recent results, analyst circles frequently speculate about the sale of FT. It is however rather unlikely that this will happen anytime soon, considering that 2007 was a record year for Pearson. The paper hired well-known columnist Clive Crook for the British market and in the future, former deputy editor-in-chief of the ‘Economist’, who will be writing for the FT from Washington. The FT website is the subject of a shift in strategy too. While Scardino still toyed with the idea of cutting back on the content on FT.com that required fees in 2006, following the example of the New York Times’ completely free online website, Pearson now wants to hold on to the so called ‘Chargewall’ of the Internet-FT, albeit with a tiered structure: As of now, users can download up to six articles for free from ft.com. The free registration is reward with another 30 free articles; everything that exceeds the limit(s) is only available against a fee.

The FT’s Chinese Interned edition sports 400.000 registered users and is the most influential source for economic information in China and the leading international newspaper in all of Asia – completely pushing the Business Week by McGraw-Hill off the market. The Wall Street (WSJ) Journal, that is part of the NewsCorp.-Empire still retains its status as FT’s nemesis on the international market. It remains to be seen what impact the takeover of the Dow Jones Company and its flagship ‘Wall Street Journal’ through media entrepreneur Rupert Murdoch will have on the FT-Group.
With an approximate daily circulation of 2,1 million copies, the WSJ is four times as big as the British paper, of which more than 1,6 million copies are sold in the USA mind you. ‘Wall Street Journal Europe’s fierce attack on FT’s leading position in the EU states that is being expected by business experts, has not happened yet.

Pearson Education:
Since the acquisition of educational publishing giant Simon & Schuster out of Viacom-Group (1998), Pearson Education is the world’s leading supplier of educational and non-fiction books as well as encyclopaedias and lexica. The segment has been the subject of strategic expansion ever since and is what constitutes the core of the Pearson company today, contributing almost two third of all revenues and profits single-handedly. The second major publisher, next to Simon & Schuster, is Addison Wesley Longman. Furthermore, US-American educational book publishers Prentice Hall and Scott Foresman are part of the group. The US educational software house NCS joined the ranks. The very expensive purchase of NCS (National Computes System) that had been harshly criticised early on, gained Pearson an advantage over competitors such as Reed Elsevier, which have not invested in educational software so far.
Pearson operates a total of 5000 test centres all over the world. The take over of the British examination board Edexcel that was completed in 2005 caused a double controversy: On the one hand, critics lamented the fact the commission, which hands out qualifications to students by means of tests and questionnaires is the first in the world to be in private hands. On the other hand, there was an outcry of indignation, when the ‘Educational Supplement’ of the ‘Times’ disclosed that the test’s basis of evaluation would be much to low and caused distorted test results.

In May 2006, Pearson acquired the school infosystem ‘PowerSchool’ from Apple. Powerschool offers teachers, pupils and parents a web-based service that informs them about grades, homework and attendance. The service will be used to support the US American ‘No Child Left Behind’ campaign. The purchase of PowerSchool is quite interesting due to the fact that Pearson plans to develop iPod-solutions for teachers and pupils, such as podcasts for revisiting content or preparing for exams. This quiet revolutionary idea could be the next step in Pearson’s quest of leaving the competitors behind in the race of the online education market.

The biggest position within the Pearson portfolio is the education division, where the company enjoys steady increase in revenues generated by the US market. After the usual ‘adoption cycle’ in the USA, the majority of states decided to buy new educational books in 2005. The respective market expanded by 80 percent, according to analysts. Unlike its competitors, Thompson and Reed Elsevier, Pearson holds on to its educational branch and keeps expanding it. In early May 2007, Pearson took over the exam-assessment company Harcourt Assessment (USA) and the worldwide active British educational book publisher Harcourt Education International by Reed Elsevier for 950 million US Dollars.

Following the take over of the Harcourt education division through Reed Elsevier, Pearson unswervingly continued its expansion campaign into the field of education. In June 2007, the company bought eCollege, one of the largest suppliers of online courses for further education and online degrees in the USA for 538 million US Dollars. eCollege cooperates with approx. 180 educational institutions in the States. This acquisition emphasises the focus on digital education products, which already constitute about one billion out of Pearson’s revenues. eCollege, which is limited to the US American market so far, will be turned into a global brand thanks, taking advantage of the existing infrastructure.

Penguin Group:
The Penguin Group is the world’s first and largest publisher of paperbacks with countless subsidiaries and active in all English-speaking corners of the earth. Since 1996, US-American Putnam Berkley is a part of company under the name of Penguin Putnam. Other well-known publishers of the Penguin Group are Viking, Dutton, and Dorling Kindersley as well as travel guide brand Rough Guide since 2000 and spring 2002 respectively.

In May 2007, Penguin was awarded the renowned ‘KPMG Publisher of the Year Award’, which is handed out to publisher with ‘social and ecological responsibility’. Penguin contributed 74 million Pound to the annual revenue in 2007 (the total revenue was 846 million Pounds) and as such, generates a considerably higher return on sales than the world’s largest publishing holding Random House of the Bertelsmann Company.