ProQuest Company (http://www.proquestcompany.com) has sold three parts of its Information and Learning business (http://www.il.proquest.com) to a start-up company led by former ProQuest executives. National Archive Publishing Company (NAPC; http://www.napubco.com) has acquired UMI Periodicals in Microform, XanEdu (which provides college coursepacks), and ProQuest's microfilm and digitization service operations. The divestiture removes sluggish businesses from ProQuest's portfolio and allows it to focus on digital publishing, K-12 curriculum products, and news-based and unique published products for higher education. ProQuest retains microform product lines in newspapers, research collections, dissertations, and books on demand. The company has retained digital rights to all content, including the periodical microfilm content that was sold. NAPC will license the UMI name for its periodical microfilm products only; UMI continues as a key product brand for ProQuest. NAPC will also work with ProQuest under a long-term service contract to produce microfilm and digital content. The impact on ProQuest customers is expected to be negligible.
NAPC purchased the existing manufacturing facility and operations located in Ann Arbor, Mich., and will assume portions of ProQuest operations located in Boston; Wooster, Ohio; and Louisville, Ky. The management buyout involves 350 employees; no job losses are anticipated.
The divested businesses represent about 10 percent of ProQuest Company's overall revenue. Within Information and Learning, XanEdu accounts for just 5 percent of sales. XanEdu currently has 1,400 institutions as customers. According to a ProQuest representative, "XanEdu was very near breakeven/profitability and the microfilm products were very profitable." The company had been looking at alternatives for the businesses for more than 6 months. Buyers, both from the film and digitization industry and from the financial sector, expressed interest in the businesses; NAPC came into the process and submitted the highest bid. The businesses were sold for $30 million, less an adjustment for working capital.
Dan Arbour is founder, president, and CEO of NAPC. He had been with ProQuest for more than 30 years and was most recently vice president of North American sales operations for ProQuest Information and Learning. Other executives who form the partnership of the firm are:
- Joe Mills, executive vice president of manufacturing operations. Most recently, he was vice president of manufacturing operations at ProQuest.
- Tim Mitchell, executive vice president of sales and marketing. He had been national sales director for traditional business and manager of federal sales at ProQuest.
- Jeff Moyer, executive vice president of publishing. He joins NAPC from Thomson Gale. Earlier he was with Apex CoVantage in e-publishing and ProQuest, where he worked to develop the company's initial Digital Vault products.
In announcing the company's 3Q financial results on Oct. 27, Alan Aldworth, chairman and CEO of ProQuest Company, had divulged the company's plans to divest the businesses and said they were in final negotiations on that date. "Archival content historically has been and remains an important part of the business mission of ProQuest Company. Today, we believe that redirecting our higher education resources to our digital published products will result in more sustainable revenue growth. This divestiture will give us greater flexibility to focus on our growth platforms—K-12 curriculum products and unique published products for higher education," Aldworth stated. The sale to NAPC was announced 4 days later.
During the company's earnings call with analysts, Aldworth had candidly stated that "the periodical microfilm business is simply not strategically important to us and has become an increasing drag on our resources and our precious time." In a follow-up press release that provided more details about the finalized sale, he referred to the declining sales of microform and stated: "We believe this was not a sustainable long-term business for ProQuest Company. This divestiture allowed us to capture the market value of the periodicals microfilm business today, while eliminating the risk of accelerating revenue and profit decline."
In the earnings call, Aldworth also admitted that XanEdu had not lived up to the company's profitability expectations, "despite several years of our best efforts." He added: "The shift from print to electronic coursepacks did not happen at the rate that we had expected it would. It was still largely a print business, which is a low margin business that is very competitive with local Mom and Pop shops." He also said the service had experienced problems with copyright piracy. And, the XanEdu electronic toolset for professors had been "disintermediated" by course management systems themselves. "The XanEdu business we envisioned has essentially morphed into selling electronic content to institutions and facilitating the legal use of that content within the classroom. That business we continue to do through ProQuest." He also revealed that the amount of ProQuest content used in the coursepacks had proven to be only about a quarter of the total, so permissions had to be secured for the remaining content.
Arbour, who was unavailable for an interview because he wants to focus his attention on customers and employees, answered some of my questions by e-mail. On whether there is an ongoing need or market for microfilm, he wrote: "Our customers continue to support the microfilm programs due to the need to preserve historically important materials. We are confident that this support will continue moving forward. We have customers who want and need these stable products to ensure that library materials damaged or deteriorating on site can be replaced wholly and affordably."
Librarians feel the responsibility to provide long-term archives and find that electronic options are not yet completely reliable, according to Tina Creguer, director of marketing and communications at NAPC (she is a former ProQuest employee who has known Arbour for 17 years). She noted that titles can disappear from full-text databases—there are usually no guarantees for continued inclusion.
Concerning the growth prospects for the new company, Arbour wrote: "We see clear opportunities to fully use the digitization and microfilm expertise already at NAPC and develop solid growth, in addition to building on the superb growth prospects for the number one coursepacks brand in the world, XanEdu."
Arbour stressed the positive aspects of the deal for existing customers. "A big benefit to our customer base of more than 5,000 is the invisible transition from ProQuest as a provider to services provided by NAPC directly," he said. "Our total business is now focused on the strategy of serving existing customers for UMI Periodicals in Microform and XanEdu in the same professional manner they have grown accustomed to—and to leverage our vast capabilities, experience, and capacity to develop new products and enhance the value of our existing offerings."
NAPC, as a privately held firm with seasoned, capable executives, will likely be able to make the most of these assets (and be more flexible and faster to change when warranted) than a publicly traded company like ProQuest. It is also likely that the digitization piece of NAPC's business will grow considerably as the microfilm business wanes.