McGraw-Hill operates by the book, or in this case by the textbook. The company is a leading publisher of textbooks, tests, and related materials, serving the elementary, secondary, and higher education markets through McGraw-Hill Education (MHE). Other businesses include S&P Ratings (indexes and credit ratings); S&P Capital IQ and S&P Indices (financial and business information); and Commodities and Commercial (Platts, J.D. Power and Associates, McGraw-Hill Construction, and Aviation Week). McGraw-Hill plans to split into two companies: MHE will house all education-related assets, and McGraw-Hill Financial will include S&P Ratings, S&P Capital IQ, S&P Indices, and Commodities and Commercial Markets.
In November 2012 McGraw-Hill announced it reached a deal to sell its education arm to private equity firm Apollo Global Management for $2.5 billion in cash and debt as part of its plan to focus on its financial information businesses. The sale includes its digital and traditional textbook business and other assets. When the deal closes, McGraw-Hill Companies will become McGraw-Hill Financial.
The company decided to spin off its education business in response to decreased spending on elementary and high school textbooks. Its financial business, which provides global financial information, research, and analytics tools to investment advisors, wealth managers, and institutional investors, has faired better. The deal is creating two more focused public companies, each of which McGraw-Hill hopes will operate more efficiently.
Another component of the company's reorganization plan to increase shareholder value was the 2011 divestiture of its Broadcasting Group, which McGraw-Hill called a non-strategic asset. The business included four ABC-affiliated television stations in the markets of Bakersfield (KERO), Denver (KMGH), Indianapolis (WRTV), and San Diego (KGTV), as well as five Spanish-language stations affiliated with Azteca America (a network run by TV Azteca) in California and Colorado. McGraw-Hill sold the unit, which had accounted for less than 2% of total sales, to E.W. Scripps, for $216 million.
McGraw-Hill revenues were up slightly in fiscal 2011 compared to 2010 ($6.25 billion vs. 6.17 billion), and net income also increased slightly compared to the prior year ($911 million vs. $828 million). McGraw-Hill benefitted from increases at its stock index and financial information businesses, as well as strong growth in college textbook publishing. Also in 2011 the company cut costs when it eliminated approximately 800 positions across McGraw-Hill and realigned its benefit programs.
McGraw-Hill has more than 200 offices across the globe. International sales account for more than 30% of McGraw-Hill's total revenue, with key markets such as India and China growing rapidly. Presence in these markets include CRISIL, the company's majority-owned Indian credit rating agency, and a minority stake in Ambow Education Holding, an education company headquartered and publicly traded in China that provides e-learning technologies and education services.
Chairman, president, and CEO Harold "Terry" McGraw III is the great-grandson of the company's founder James H. McGraw. Terry's father, former CEO Harold W. McGraw Jr., died in 2010. – less