Wiley Beefs Up Higher Ed Biz: Partners With Knewton, Buys Online Degree Veteran Deltak

| About: John Wiley (JW.A)

By Rip Empson

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John Wiley & Sons (NYSE:JW.A) the 200-year-old publishing giant best known for its scientific, technical and medical texts and journals geared towards academic and scholarly audiences, appears to be on a mission to beef up its higher education business with a dose of technology.

Following its partnership with adaptive-learning startup Knewton, Wiley has announced that it will acquire Chicago-based online degree services company, Deltak.edu for $220 million. The acquisition, which is expected to be finalized by the end of the month, diversifies the publisher's higher-ed offerings and adds some fuel to its digital learning strategy.

Founded in 1997, Deltak.edu is a veteran of the edtech space, which partners with universities to develop their online degree and certificate programs. With all the attention being given to open online course platforms, like Coursera, EdX and Udacity, Deltak is playing in a hot space - and has been for years. On the scene long before prestigious higher ed institutions began adopting Coursera, Deltak helps universities transition their brands, content and programs into online experiences that are on par with on-campus services.

Like 2tor, Deltak works extensively with the university whose content they're transitioning, giving schools an enterprise-grade service that includes market research, instructional design, marketing, and student recruitment and retention with the goal of boosting the quality and efficacy of online and hybrid programs. It's almost like StraighterLine-as-a-Service.

With the added pressure from MOOCs to get hip or fall behind, schools are increasingly looking to enter and scale in online ed markets quickly and efficiently. Of course, given their resources and budget constraints, they're hard pressed to do that. That's where Deltak comes in, helping them to minimize the risk in this important transition without paying out of their ears.

Deltak has been seeing strong growth of late, with a reported $54 million in revenue in FY 2012 and now supports over 100 online programs - a number we might expect to increase over the next year. In short, the acquisition enables the company to leverage Wiley's strengths, i.e. its content, workflow apps and institutional relationships to expose it to more business, especially in international markets. Wiley's reach will be key for Deltak going forward. "We'll also expand our online learning services to universities worldwide and create opportunities for Deltak's partners to increase their reach via a global market," Joseph Heider, Wiley's Senior Vice President, Global Education, said in a statement.

As mentioned previously, there's some worthwhile context in which to see this announcement, especially as it relates to Wiley's shifting focus. Under its new partnership with Knewton, Wiley will begin offering the startup's Math Readiness course in Australia and New Zealand. As Knewton's adaptive learning platform focuses on personalizing the online academic experience for college students, helping them to learn (in this case math) more efficiently and effectively, the partnership is a further indication that Wiley is looking to refine its learning materials and online educational experience with the help of next-gen technology, like Knewton's. (Wiley is following in the footsteps of Pearson in this regard, which is already using Knewton to power and personalize its digital learning content.)

Wiley also happens to be the publisher of popular travel guide, Fommer's, which the company sold to Google in August. As the WSJ pointed out back in March, Wiley said that it had been considering the sale of some of its most recognizable brands, which includes the likes of Webster's and CliffsNotes.

It's not surprising to see the company giving up a few of its popular travel and consumer businesses in favor of focusing more on its wheelhouse: higher ed. With boundless others working diligently to disrupt both traditional and digital textbooks, and with online and open education resources and MOOCs doing their part to devalue the role of content in courses and learning - putting it more on HOW students learn the material - Wiley needs to adapt to keep its size advantage. Acquiring Deltak is a move in that direction.

Wylie's earnings fell last quarter, but shares were up on the heels of this announcement.

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