The Global Media Weekly for executives and entrepreneurs

The gold in universities data

Private equity-owned Times Higher Education (THE), of London, has acquired the Washington DC-based Inside Higher Education. The price was not disclosed but is believed to be the equivalent of £30-35m (<15 x EBITDA or 4 x revenue).

In 2021, the US company is believed to have had revenue/ EBITDA of some £8m/ £2.3m. It claims an audience of 25m higher education professionals for its news, analysis and jobs board. THE is now expected to expand its events portfolio in North America where the enlarged company now has 40 of its 250 people.

The deal – three years after THE itself was acquired by Inflexion for £92m – firmly internationalises the UK-based company whose revenue will now be divided almost equally between EMEA, APAC and the US. It has an audience of 55m, and 1.5m registered users. Some of THE’s 225 institutional subscribers pay hundreds of thousands of dollars annually for data, events, and promotional activity.

The higher-margin (30%) US business – which will retain its Inside Higher Education branding – will help to increase THE profit by an estimated two-thirds in 2022:

EBITDA 9.6 5.3 0.6 4.25
UK filings/ *Flashes & Flames estimates. Note: IHE acquisition is included in 2022

But the most significant thing about Times Higher Education is that its main business is no longer the eponymous weekly magazine which last year celebrated its 50th anniversary. Instead, the large majority of profit is now derived from its influential annual World University Rankings, which are used by students to select courses, by academics to examine career options and research collaborations, by universities across the world to benchmark their performance, and by governments to formulate policy. 

Times Higher Education was one of the pioneers of global rankings of university reputation and performance, publishing the first edition in 2004. It scores more than 2,000 research-focused universities across their core missions: research, international outlook, knowledge transfer, and teaching. Staff are surveyed to share their experiences and opinions, and the results are combined with quantitative analysis to construct the rankings in 13 different league tables. THE analyses more than 100m citations in the process.

Rankings increasingly guide corporate decisions on industry investment in academic partnerships. As THE says: “These rankings are not designed to say that one university is better than another. It is more about being able to look at the institution through a variety of lenses, whether it’s teaching, research, knowledge transfer or international visibility. Universities are increasingly investing in an evidence-based approach to develop a clear understanding of their position and progress. They are increasingly using a basket of diverse metrics to understand their strengths, set goals, chart their progress, and make budgetary decisions. These rankings are just one of the tools they can use.”

The business is powered by the growth of the international higher education system which has intensified the competition for top talent and funding. The explosion in “education tourism” has been striking. In 2019, no fewer than 6m of the world’s students were studying in countries other than their own – three times that in 2000, according to Unesco. A full one-third of these students were studying in the US, UK and Australia.

It’s all a long way from 2005 when Times Higher Education was a 20k-circulation weekly newspaper and website with core revenues from job classifieds, display advertising and newstand sales. It had been little more than a footnote in the prospectus which persuaded Exponent private equity to pay News Corp £235m primarily for its big sister Times Educational Supplement (TES). As the branding suggests, both publications had once been newspaper supplements to the Times of London.

TES itself is now more digital and global than in 2005 but continues to be propelled by recruitment advertising for teachers. In the past 16 years, its publisher TES Global has been owned by five successive private equity firms (Exponent, Charterhouse, TPG, Providence, and Onex) at prices of up to £400m. That may have been the price paid in December by Onex – but without Times Higher Education which had been sold-off in 2019 to exploit an estimated 15x profit ‘data’ valuation, compared with 8x for TES itself.

Although THE had launched its World University Rankings in 2004, the data had been prepared – and owned – by outside contractors. The step-change was 10 years later when the production of the rankings – together with data preparation and analysis – was brought in-house and became a proprietary service. Private equity executives marvel now at the fact that a high-value data business was effectively created for as little as £2-3m.

That major strategic move coincided with the launch of THE’s first major commercial event, The World Academic Summit in Melbourne. The Summit is now the flagship of what – outside the pandemic – is an estimated £4m events business whose 50%+ margins are a reflection of the fact that many are held in the virtually cost-free premises of universities around the world. They are also an important part of the company’s credentials and marketing of its increasingly valuable data.

It somehow seems appropriate that – after years of seemingly monopoly profits from teacher jobs – TES might yet be out-paced by its Times Higher Education offspring. The rankings are expected, within a few years, to push the increasingly-global company towards the £100m revenue currently enjoyed by TES Global.

Beyond education itself, the reinvention of Times Higher Education provides powerful evidence that major new data operations can still be created from the remnants of advertising-funded B2B magazines. In simple terms, these established brands can give media companies the knowledge of, and access to business-critical data. For all the distinctiveness of, higher education, there are many other B2B sectors where the measurement of activity, pricing, reputation and ‘effectiveness’ can be mined and marketed.

Some professional sectors might be relatively easy to colonise in this way, especially for skillful media teams. But, in the most competitive markets, information companies must be committed to continually proving and improving their data collection and analysis – to minimise the risk of commoditisation.

The branding is also vital, and that is where THE has some work to do.

A simple search for “World University Rankings” will give you at least four companies effectively using the same branding. The rivals include the UK-based, privately owned, £30m-revenue Quacquarelli Symonds (QS) which – like THE’s rankings – also started in 2004. QS also claims – like THE – to collaborate with RELX’s Scopus database of scientific research. A Moscow-based competitor cites collaboration with ThomsonReuters’ Clarivate (the company that pre-2014 had supplied the data to THE). It’s a bit confusing.

But, among the clutch of competitors, Times Higher Education is winning. Its unique editorial heritage (it employs 24 journalists – 20% more than a decade ago) creates powerful events and is also now building a business of helping students to secure university places. There’s a lot to fight for.

Times Higher Education