Pearson buys five percent stake in Barnes and Noble Nook

Pearson gets favorable distribution rights on Nooks

After a less than stellar holiday selling season, Barnes and Noble sold a stake in Nook Media to education publisher Pearson this week for $89.5 million, giving Pearson a five percent equity stake in the company.

It seems like less than a coincidence that the announcement comes at a time when reports that Barnes and Noble submitted paper work to the SEC indicating its holiday sales did not meet expectations. 

The deal gives Pearson first rights to sell its educational content on Nook devices and could pave the way for them selling Nook devices to students, complete with Pearson content installed.

Will Ethridge, Chief Executive Officer of Pearson North America, said this new deal extends a partnership, which has been in place for years, further into the digital realm.

"This new agreement extends our partnership and deepens our commitment to provide better, easier experiences for our customers. With this investment we have entered into a commercial agreement with Nook Media that will allow our two companies to work closely together in order to create a more seamless and effective experience for students," Ethridge said in a statement. 

Meanwhile, Barnes and Noble CEO William Lynch justified the deal in a statement by saying they formed Nook Media to be a leader in digital content and this deal helps add to that overall goal.

The investment comes on the heels of Microsoft's (NASDAQ: MSFT) $300 million investment last year, but Barnes and Noble still controls 78.2 percent of Nook Media. Pearson has an option to buy an additional five percent stake down the road.

At a time when stand-alone eBook reader sales are under pressure and the fuller function tablets are facing increased competition, this deal could be a smart one for both Pearson and Barnes and Noble. If the stand-alone readers could be repurposed for educational purposes, it could provide a niche market for the devices for years to come, while giving Pearson a much needed lift in the digital content space.

For more information:
- see the Barnes and Noble Press release

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