- Academic publishers McGraw-Hill and Cengage are calling off their proposed merger a year after it was announced, the companies said jointly on Monday.
- The pair cited complications with the regulatory review and divestitures processes as the reasons for scrapping the deal.
- From the start, the proposition was dogged by criticism that it would reduce competition in the textbook market, leaving students with fewer choices and higher prices.
The decision on the merger had already been pushed back from its initial expiration date of Feb. 1 to May 1.
Prior to that, consumer advocacy groups had pressed the U.S. Department of Justice to block the deal, saying it would leave the textbook market dominated by just a few big players at a time when competition was needed to drive down rising textbook costs. Their combined market share was said to be around 30%, Reuters reported in January.
The companies expected that the arrangement would "expand the missions of their respective affordability programs," they told Education Dive in a joint statement in August. But those programs, often called inclusive access arrangements, raise other concerns. Increasingly popular among publishers, they fold the cost of digital course materials into students' tuition and fees.
Student advocates have said the programs limit students' options for accessing course materials more affordably. That could include borrowing them from friends or a library.
While open educational resources (OER) are gaining traction, they still see limited use and can be time intensive for faculty. However, one recent study found using OER across the institution could save schools and students money
Regulatory approvals were a complicating factor as the companies sought to merge, Inside Higher Ed reported earlier this year. The pair has many competing titles and companion digital platforms, some of which they would have needed to sell or license to competitors to comply with the Justice Department's rules for the merger, the publication noted.
In a call with investors Monday, Cengage CEO Michael Hansen said a "large request for divestitures," particularly focused on higher education courses, made the deal untenable. The companies could be asked to divest as much as $175 million, Inside Higher Ed reported. Regulatory scrutiny in the United Kingdom also threatened to extend the deal's approval timeline.
The Justice Department did not respond to Education Dive's request for more details on the required divestitures by press time on Monday.