Elhi Publishing Shrank 5% in 2006, Growth Anticipated for 2007

by Edward Nawotka, PW Daily -- Publishers Weekly, 2/13/2007

At the annual Association of American Publishers meeting for elhi publishing this past week in Austin, Tex., Goldman Sachs analyst Peter Appert predicted a 4.3% growth in the elhi market for 2007. In 2006, that market shrank 5% from the previous year, making it one of the worst years since 2002. Overall, total educational industry revenues were down 1.5% last year, for "the first time in a long time," said Appert.

"The year 2007 is moving in the right direction," said Appert, "but it is not going to be as robust as originally forecast."

On a positive note, he also predicted that profitability will increase, with margins rising as much as 15% over this year, again reversing the trend in 2006 for declining margins. Appert said he believes the hike in margins may be even greater in future years.

The analyst also suggested that as a result of the increased profitability, smaller elhi publishers may become acquisition targets by private equity or may be looking to consolidate.

Elsewhere at the conference, keynote speaker Bob Wise of the Alliance for Excellence in Education explained that, according to his organization's research, only 30% of eighth graders in the United States "read proficiently"—a statistic that should send shivers through the book business. One of the reasons, said Wise, is that funding for literacy programs, which amounts to $72 per student in K-third grade, virtually disappears in higher grades, with only 13 cents dedicated to such programs for students in middle and high school.

With little funding, adequate teaching tools are lacking.

Wise then issued a challenge to the collected publishers to produce "more high quality reading materials for young readers, especially in the middle to high school years."