...A popular chart going around shows that since 2001, college textbooks have increased in price more than 100% while recreational books have fallen in price by a little more than 1%. The consumer price index, meanwhile, has only increased about 30%. Have writing, printing, and supplying higher-education materials increased in cost so much that producers are just trying to pass on the expenses? Likely not. The fact is that consumers of college textbooks typically don't have a choice, making the demand inelastic and allowing publishers to charge prices well above what the consumer may value. While fantastic for publishers' margins, is this bubbly business sustainable? Let's analyze it. The rotating roster of publishers McGraw-Hill Education, now owned by Apollo Group (NASDAQ: APOL ) , Pearson (NYSE: PSO ) , and Houghton Mifflin Harcourt make up the three largest educational publishers. The previous owner of McGraw-Hill Education, McGraw Hill Financial (NYSE:MHFI ) , completed the sale of its textbook segment in March for $2.4 billion in cash, which it is using for share buybacks. Why did McGraw Hill want to divest from its education segment? The company's press release positions the slimmer group as "a high-growth, high-margin benchmarks, content and analytics company." And since completing the sale in March, McGraw Hill's stock has outperformed the S&P 500 by 14%. But was the segment that big of a drag? Not too much. In 2011, its education business brought in 37% of its...
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