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Pearson, Once a Market Leader, Leaves Online Services Business

Pearson, Once a Market Leader, Leaves Online Services Business

Inside Higher Ed

Doug Lederman
March 22, 2023
Once upon a time, Pearson Education helped Arizona State University become one of the biggest online powers in higher education. It was one of the first, and most significant, arrangements in what would come to be known as the online program management industry.
That contract more than a decade ago made Pearson a major player in the burgeoning industry that has done nothing but expand as more colleges and universities move into online education (despite growing regulatory scrutiny).
But the formal expiration of Pearson’s contract with Arizona State, announced last summer, solidified what had been clear for years, which is that Pearson had been supplanted as a market leader by 2U, Coursera and a slew of other players. A few months later, it announced a “strategic review” of its online services division, which led to speculation that it would sell the unit and, in the eyes of numerous market observers, put Pearson in competitive limbo.
Tuesday the company announced that Regent, a California-based private equity firm, would take over Pearson Online Learning Services, in exchange for 27.5 percent of the profit the unit generates over each of the next six years and that same proportion of any proceeds Regent earns in a “monetization event” after Pearson sells it. It does not appear as if Regent is paying anything for the Pearson unit up front, which led the analyst Phil Hill, in a blog post about the news, to declare, “In short, this is somewhat of a distressed sale. Get this mess off our hands, you make the big cuts to get it profitable, and we’ll make money only if you can turn it around.”
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