The recent news that Wiley is seeking to divest itself of some big brands (Frommer’s, the “For Dummies” series, Webster’s New World, and CliffsNotes, among others) can feel somewhat confounding. Each of these brands seems vibrant in the market, and it seems like each could have a decent digital strategy.
Pursuing strategy over expediency is a long and lonely journey — whether you make the right strategic choices or not. Is divestiture at this point the right strategy for Wiley? David Worlock recently published a post about some other sell-offs of print publications — assets that were not sold 10 years ago, when it might have made the most sense to sell them, resulting in an entirely different calculus:
I know exactly when these print assets should have been sold: in 2002 at the end of the Dotcom Bust. And I cannot persuade myself that a wrong move then will be rectified by a pointless move now, or that value will be added to anything by selling the subscription/advertising print stable . . . to someone who is simply going to live on a declining annuity until it expires. There will in any case be few buyers, and those who do appear will not want the stable, but just one or two of the old nags.
In the realm of expediency, part of what Wiley is facing is that the broader support system for the “For Dummies” guides, Frommer’s print, and CliffsNotes is eroding away, with the bankruptcy of Borders being the most prominent sign of change in this area. No longer can Wiley bank on pushing through sales on the scale they once did for these brands. Things have changed, making the ledgers for these brands sag in the short-term. Wiley is seeing revenues flatten but net income increase, mostly because of success in other areas, and they certainly hope shifting these brands off their books will accelerate this trend. In their last quarter, it sounds like STM lines grew while trade and professional lines shrank.
But what is driving the future for Wiley and others? Worlock hits on a convincing answer, based on the increasingly tight connection of users to providers, especially at the point-of-work product:
Do you see where we are going? We are going to be the full service providers to a handful of vertical markets which we feel confident about dominating.
Ultimately, Wiley’s sale of reference, study guide, and travel businesses suggests the strategists see that dominating, not diversification, is the path to victory. And perhaps that’s a fundamental strategic shift from old print-based businesses to new digital businesses — diversification works in print, domination works online.
And while a domination strategy for Wiley means putting more focus on the sciences, where growth and clear verticals both exist, it will require a significant effort to execute such an approach sufficiently and well. Attempts to dominate these verticals are emerging all around us. In medicine alone, we see things ranging from EBSCO’s DynaMed to Wolter-Kluwers’ OvidMD to Elsevier’s ClinicalKey — semantics, focused repositories, and workflow solutions are being pursued with vigor, major investments, and big ideas. Similar fronts are opening in chemistry and engineering, and probably others.
So is Wiley making a good move now? Should Frommer’s, the “For Dummies” brand, and CliffsNotes have been sold a decade or more ago, when the writing on the wall was freshest? Does selling them now make strategic sense? Or is it too little, too late?
There may never be a clear answer. There is no randomized trial at hand. But if the ship has sailed on divestiture, another option may be to morph them into something that fits the modern era. As Worlock counsels:
Just don’t throw away something which is pretty worthless now on its own, but which may be needed on a journey to a much better place.
As Michael Porter once said, strategy is what you choose not to do. But plans are easy, reality is difficult. The digital world does seem to demand businesses that are smaller, more profitable, and able to dominate verticals. In that case, we may be entering an era of deconsolidation. And what an interesting era that would be.
[Correction: The original version of this post listed Fodor’s and the Idiot brands as Wiley brands instead of Frommer’s and “For Dummies.” I must have picked these up from a downstream news report, and perpetuated the error. I have corrected it, and feel like an idiot who wants to travel, so maybe I’ll look into those brands anyhow. Thanks to those who shined a light on these errors. My apologies.]