The New York Times' Eric Pfanner packs a lot into a brief article about Houghton Mifflin Riverdeep Group's (HMRG) acquisition of Harcourt Education. (Earlier posting here.) Among other things HMRG's CEO, Barry O'Callaghan, is a wunderkind at 38.  More important, he's a former invesment banker with one of his current backers, Credit Suisse.  So his aquisition moves can be seen as a variation on the private equity plays k-12 has seen over the past few years.

Pfanner sums up the motivations on both sides of these transactions for venerable properties in the old education industry:

Analysts say private equity has been attracted to the educational business by steady cash flows, a relative lack of competition and expectations that spending will increase in the coming years as states like California step up textbook replacement programs.... Yet companies like Reed Elsevier, Thomson and Wolters Kluwer have been willing to leave the business because educational publishing has lagged behind areas like medical, legal and scientific publishing in the shift to digital distribution, analysts say.

Your editor can't say why the other sectors might have grown, but K-12 publishing has slowed for two reasons: First, textbooks no longer hold a monopoly as inputs to classroom teaching and learning. Second, the providers of the new product and service segments taking growth from textbooks are not controlled by publishers. 

But whether the player is the owner of the old industry textbook publisher, or the buyer of that firm with plans for reinvigoration, there's a wild card that might become a third reason - Scientifically Based Research (SBR). If it is enforced in NCLB II, the old industry and its new owners are going to find that their greatest asset - educators' perception that their brand names are synonomous with quality - will deteriorate, and their great marketing and product distribution channels will be worth a lot less.  The other side of that coin is that providers in the new school improvement industry that the old industry is trying to buy up, will be in a much better bargaining position.

Frankly it's a big "if." Today SBR is honored in the breach; it's a very tough problem balancing the state of the evaluation art, the value of consumer protection, and the need to promote innovation; and the supporters of SBR in the school improvement industry are outmatched by  the big publishers that don't want to see it, and unfortunately too many new providers that don't really want to see their programs subject to evaluation for value-added to student test scores either.

Still, Senator Kennedy and Congressman Mitchell do seem to care, and that's a non-trivial counterweight. And the Reading First investigations suggests scrutiny could do a lot of damage to trust educators have in the major publishers. So the story is still unfolding, and the outcome is not clear.