CAPPS - Avocacy and Communication Professional Development

California Association of Private Postsecondary Schools

For-Profit Ashford U. Forms Alliance With Forbes

11/06/2013

The Chronicle of Higher Education.  November 6, 2013.  Kaplan University allied its business school with Newsweekmagazine seven years ago and then scrapped the deal after just two years. Now Bridgepoint Education’s Ashford University has announced a branding alliance with the Forbes magazine company.

Ashford said on Tuesday that it would pay Forbes Media LLC $15-million upfront, plus a minimum $30-million over the initial 12-year term of the deal, for the rights to the company’s online content for use in bachelor’s and master’s programs in business.

The for-profit university will also rename its business school the Forbes School of Business. (That’s a twist on the way naming rights work for schools and buildings in nonprofit higher education: There, the colleges usually receive money in the form of donations in return for naming rights, rather than paying for the rights to the name.)

The news came on the same day Bridgepoint announced a big decline in enrollment at Ashford and its much-smaller University of the Rockies. Enrollment at the two institutions stood at 68,566 as of September 30, 25 percent lower than a year earlier. The number of new students declined even more sharply, falling from 20,500 for the quarter ending September 30, 2012, to 12,500 this year, a decrease of 39 percent. The declines were among the deepest ofseveral recently reported by major for-profit higher-education companies.

For the quarter, Bridgepoint also reported a 26-percent drop in revenue, compared with a year ago, and a 73-percent fall in operating income.

Richard Pattenaude, Ashford’s president, attributed some of the decline to the university’s tightening of admissions standards and its new policy of encouraging poorly performing students to leave at no cost and at no academic penalty up to three weeks into their first five-week course. He also acknowledged the challenge of the increasingly competitive online-education market.

Mr. Pattenaude said he hoped the alliance with Forbes would create more visibility for the business school, which accounts for about 20,000 of Ashford’s enrollment. The idea for the alliance originated from conversations between Bridgepoint and Forbes executives, he said, but neither he nor a Bridgepoint spokeswoman had further details. He said faculty members “have been very positive in their response.”

Bridgepoint said in a news release that the alliance would give students “access to unique speaker events drawn from Forbes’ roster of more than 1,200 international contributors.”

The arrangement is reminiscent of the “Kaplan University/Newsweek M.B.A.,” which promised Kaplan students opportunities for coursework developed from Newsweek articles and the chance to hear lectures from Allan Sloan, Fareed Zakaria, and other well-known journalists who were then working at the magazine. (Like Kaplan, Newsweek was then owned by the Washington Post Company.) The program ended about two years later. A Kaplan spokesman said on Tuesday that it ended when the M.B.A. was revamped to include more analytic and communications skills.

The alliance of Ashford and Forbes is also in some ways similar to the ways in which Chancellor University, and now Strayer University, sought to parlay an association with Jack Welch, the former chief executive of General Electric. Chancellor closed this year, two years after the Welch Management Institute moved to Strayer.

According to the Strayer website, Mr. Welch holds quarterly video conferences with students in the executive-M.B.A. program there and “appears in exclusive videos about current business events.” Strayer has also experienced overall enrollment declines, but a company official did not immediately respond on Tuesday to an inquiry about enrollment trends in programs tied to the Welch institute.

Mr. Pattenaude, of Ashford, said that he was not familiar with the Kaplan experience and that the Forbes partnership differed from the Welch institute because that one is based on one person. “This is a partnership,” he said, “with a company that has a great deal of content.”

He said Ashford would develop plans for the alliance within a month. Under the deal, Bridgepoint said it would pay annual royalties to Forbes based on revenue attributable to programs related to its business school, with a minimum annual payment of $2.5-million.

Forbes Media is best known for its biweekly namesake magazine, which calls itself “the capitalist tool” and has been bucking magazine-industry trends with a rising subscriber base over the past five years. Forbes “specializes in business education in its own way,” said Mr. Pattenaude.