Student leaders seek DOJ intervention in textbook company merger

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If the merger goes through, McGraw-Hill and Cengage could control 45 percent of the whole textbook publishing market. (Bailey Nobrega | Collegian Media Group)

In late July, student leaders from across the country submitted a letter to the United States Department of Justice asking the Antitrust Division to examine the merger of two textbook companies.

Jansen Penny, student body president, is one of more than 40 student leaders to cosign the letter. Student representatives from the University of Kansas, Emporia State University and Wichita State University also cosigned.

The proposed merger would combine Cengage and McGraw-Hill, two of the largest textbook publishers in the United States. The two companies are just a couple of the five printers that control 80 percent of the textbook publishing market, according to the letter.

“This merger could impact all of us through higher costs of those textbooks,” Penny said.

Previously, the CEO of Cengage Michael Hansen and the CEO of McGraw-Hill Nana Banerjee said the merger is about increasing affordability for consumers, but Penny said he’s concerned about the merger interrupting the chain of supply and demand.

“Textbooks are a captive market — it’s not something that’s very optional. When it comes to economics and supply and demand, there’s always a demand for textbooks,” Penny said. “The textbook companies know this and they pretty much take advantage of that based on the pricing of those.”

If the DOJ approves the merger, Penny said, McGraw-Hill and Cengage would collectively share 45 percent of the market in that industry. He said it’s basically two of the “biggest players in the game” teaming up.

Cengage and McGraw-Hill contest these numbers, saying they are similar companies, but not necessarily parts of the same complete market. Cengage targets their materials primarily toward the higher education market, whereas McGraw-Hill participates more in the K-12 academic materials market.

Arielle Patrick, spokesperson for the merger, also pointed out that current programs from the companies right now are focused on lessening costs for the consumer. For instance, she said, Cengage projects that its unlimited digital textbook subscriptions could save students a collective $160 million in the 2019-2020 academic year. For $119.99 a semester, or $179.99 a year, students can purchase unlimited access to all of Cengage’s textbooks and course materials

Penny said he decided to sign the letter after the chair of the Kansas Board of Regents’ Student Advisory Committee chair and ESU student body president Paul Frost brought the U.S. Public Interest Research Group’s Education Fund campaign to block the merger to his attention.

The committee as a whole considered the letter, researched the merger and collectively agreed to sign the letter.

One of the major factors that pushed him to sign the letter in support of the campaign was what he saw as the “anti-competitive aspect” of such a large merger.

“If you have less people selling in the marketplace, you have more market power and they can create higher prices there,” Penny said.

To bypass the burden of rising education costs, Kansas State University started the Open/Alternative Resources program or Open Textbook Initiative. Penny said the program has made K-State a model school in the Kansas Board of Regents with conversations about lessening fees and tuition costs.

The program, as it works now, offers incentives to instructors and professors who write their own course materials and provide them to students. Students are charged $10 in support fees for each course that is part of the OAR program. Those fees are divided between the academic department and K-State Libraries.

To date, more than 100 grants of up to $5,000 for OAR textbooks have been awarded to university faculty, said Brian Lindshield, associate professor of food, nutrition and dietetic health.

Melinda Cro, associate professor of French, started using course materials she wrote in the fall semester of 2017. At the time, she said she was having a hard time finding a textbook in circulation that included the grammar review, culture and readings necessary for the intermediate French courses.

“The initiative saves students a great deal of money and allows faculty to personalize course materials in response to student and course need,” Cro said.

After the first year of using her own materials, she said she “heavily revised” the second edition for the fall of 2018 and plans to do the same for the current semester.

As for the letter to the DOJ Antitrust Division about the merger between Cengage and McGraw-Hill, the outcome is still undetermined.

“The Department of Justice, if they categorize something as being anti-competitive, they have the authority to block the acquisition just like this one with Cengage and McGraw-Hill,” Penny said. “Best case scenario is that it would be blocked in that case.”

In an emailed statement on behalf of the merger and the two companies, spokesperson Patrick said:

“We are working closely with the Department of Justice on the [Hart-Scott-Rodino Antitrust Improvements Act of 1976] review of the transaction. The transaction is expected to close by early 2020, subject to customary closing conditions, including receipt of regulatory approvals. The companies remain confident that the transaction will benefit our customers.”

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Kaylie Mclaughlin
My name is Kaylie McLaughlin and I'm the Editor in Chief of the Collegian. I grew up just outside of Kansas City in Shawnee, Kansas. I’m a junior in digital journalism with a minor in French and a secondary focus in international and area studies. As a third generation K-Stater, I bleed purple and my goal is to serve the Wildcat community with accurate coverage. I am fueled by a lot of coffee and I spend my (sparse) free time watching stand-up comedy.