Dive Brief:
- Academic Partnerships has agreed to buy Wiley’s online program management business for a base price of $110 million, according to documents filed Tuesday with the U.S. Securities and Exchange Commission.
- Earlier this year, publishing giant Wiley announced it planned to sell the unit, called Wiley University Services, and turn focus to its other businesses, such as research and publishing. The two companies plan to close the transaction by early 2024.
- Under the deal, Academic Partnerships may also pay Wiley up to $40 million from fiscal 2025 to fiscal 2026 depending on if the acquired business unit hits revenue targets. Wiley will also receive 10% of the common units of Academic Partnership’s parent company.
Dive Insight:
Academic Partnerships is one of the biggest online program management companies, or OPMs, in the U.S. It has carved a niche by largely helping regional public universities launch and run online programs.
Once Academic Partnerships completes the deal — which is subject to regulatory approval and review under federal antitrust law — the company will provide services to more than 125 colleges.
Academic Partnerships CEO Fernando Bleichmar praised the deal in a statement Tuesday.
"Across the globe, there is growing demand for high-quality, affordable online degree programs in workforce-relevant fields," Bleichmar said. "Bringing together AP and Wiley University Services will better enable the combined company to help universities meet students where they are with high-quality, timely online education in our rapidly changing world.”
The deal comes after Wiley announced plans in June to drop its OPM services. In the 2023 fiscal year, the unit brought in $208.7 million in revenue, down about 8% from the year before, according to SEC filings.
The sale is yet another sign of huge changes underway in the OPM market, said Phil Hill, an ed tech market analyst and consultant, pointing to recent challenges other high-profile companies have faced.
Pearson, another publishing company, similarly announced in March that it was selling its OPM segment to a private equity firm after losing one of its biggest clients, Arizona State University.
And it’s not the only company to lose high-profile contracts.
Education company 2U announced earlier this month that it was parting ways with the University of Southern California, one of its oldest and largest clients, on most of the online degree programs they worked on together.
The company also reported flat revenue in its degree business for 2023’s third quarter. 2U’s stock price has since tumbled to around $1, far from its high of over $90 in 2018.
“It’s just been a bloodbath financially,” Hill said.
OPMs have also been facing criticism over their business model and bracing for potential regulatory changes.
As of April, Wiley University Services contracted with 64 higher education institutions, mostly through revenue-share agreements, according to SEC filings. Academic Partnerships also uses revenue-share agreements.
Under these arrangements, OPMs typically front the capital needed to launch online programs and provide services like marketing, recruiting and course design. In exchange, colleges give OPMs a cut of their tuition revenue.
These deals have drawn concern from some Democratic lawmakers and policy advocates, who argue that they drive up the cost of online education and incentive OPMs to use aggressive recruiting tactics.
Criticism over these deals has mounted in recent years, with some groups taking issue with long-term deals that lock college programs into handing most of their revenue over to a third-party provider.
Amid these concerns, the U.S. Department of Education announced earlier this year that it would review regulatory guidance that allows recruiting companies to sign revenue-share agreements with colleges. It also sought public feedback over the guidance.
In a March comment submitted to the Education Department, Academic Partnerships argued that its revenue-share contracts push the company to only recruit students who will be successful in their online programs. It also argued that the existing guidance allows under-resourced colleges to compete in the online education space.
