38. The McGraw-Hill Comp. Inc.
Revenues 2012: $ 4.450 billion (€ 3.464 billion)
McGraw-Hill Companies, Inc. is a media company from the United States with headquarters in New York. The company is one of the 500 biggest listed US-American companies and is featured in the S&P 500 as a result thereof.
McGraw-Hill Companies Inc. publishes media in the fields of education, television, finance and economy and also releases numerous special interest magazines and educational books in the aforementioned sectors. The company includes subsidiaries Standard & Poor and J.D. Power and Associates.
1221 Ave. of the Americas New York, NY 10020-1095
Phone: 001 (212) 904-2000
Fax: 001 (212) 512 3840
Branches: Information services, financial information, television, marketing, rating-agencies
Legal form: Public Company
Financial year: 01/01 - 12/31
Founding year: 1888 (1909)
Revenues ($ Mio.)
Profit (loss) after taxes ($ Mio.)
Share price (in $, end of year)
Dividend (per share, in $)
Information and Media Services
---* not listed
- Harold McGraw III, Chairman, President und CEO
- Jack F. Callahan Jr., Executive Vice President, CFO
- John Berisford, Executive Vice President, Human Resources
- D. Edward (Ted) Smyth, Executive Vice President, Corporate Affairs
- Kenneth M. Vittor, Executive Vice President und General Counsel (Justiziar)
- Charles L. Teschner, Jr., Executive Vice President, Global Strategy
- Douglas Peterson, President, Standard & Poor's
- Lloyd G. Waterhouse, President, McGraw-Hill Education
- Glenn S. Goldberg, President, Information and Media
- Lou Eccleston, President, McGraw-Hill Financial
Board of Directors:
- Pedro Aspe, Evercore Partners
- Sir Winfried Bischoff, Lloyds Banking Group
- William D. Green, Accenture
- Charles E. Haldeman, Jr., Freddie Mac
- Linda Koch Lorimer, Yale University
- Harold McGraw III, McGraw-Hill
- Robert P. McGraw, Averdale Holdings
- Hilda Ochoa-Brillembourg, Strategic Investment Group
- Sir Michael Rake, BT Group
- Edward B. Rust, Jr., State Farm Insurance Companies
- Kurt L. Schmoke, Howard University School of Law
- Sidney Taurel, Eli Lilly and Company
- Richard E. Thornburgh, Corsair Capital LLC
Major Institutional Holders: Barclays Bank Plc (6,4%), Goldman Sachs Group Inc. (5,73%), Sarofim (4,07%).
The story of McGraw-Hill begins during the height of the railroad age. In 1888, James H. McGraw bought the ‘American Journal of Railway Appliances’ and became acquainted with John A. Hill a while later, who had been an editor for the ‘Locomotive Engineer’ back in the day. Step by step, both established their own publishing houses for engineering magazines and the appropriate book range(s). In 1909, they merged their book divisions and following the death of John A. Hill in 1917, the remainder of the companies’ branches were combined into one company - McGraw-Hill was born. The initial public offering followed in 1929, together with the founding of economy magazine ‘Business Week’. Over the years, more and more special interest magazines about industry, traffic and healthcare were added to the line-up.
After the Second World War, McGraw-Hill extended the educational book division in particular. Besides already established series for university students, the production would include educational books for elementary and secondary schools for all subjects. In 1966, McGraw-Hill acquired rating agency Standard & Poor and thus entered the field of business information and analysis.
However, the year 1970 would go down in history as a rather embarrassing one for the company. An unknown author at the time offered McGraw-Hill a biography of the allegedly dying, eccentric and reclusive billionaire Howard Hughes, which had supposedly been authorised by the man in question himself. Yet, the book turned out to be a fake. Hughes emerged from the woodwork and sued the author, who was sentenced to 30 months in prison.
In 1972, the company expanded into electronic media and bought TV stations in San Diego, Indianapolis and Denver (among others). A dragging business development in total and an above average performance of Standard & Poor led to an unsuccessful take-over attempt by American Express in 1979. The revenue surpassed the one billion US-Dollar mark for the first time in 1980. In 1995, the company was restructured into three business sectors: Education, Financial Services and Information & Media Services, all of which are still in existence today. In 1996, the revenue stood at more than three billion US-Dollar. After a ‘non-family’ interregnum from 1988 to 1998, a descendant of the publishing empire’s founder once again helms the company in the person of Harold McGraw III.
„The Mc Graw Hill Companies deliver information and knowledge, giving individuals, companies and society the chance to maximise their potential. They all share a common goal: To adapt to the requirements of an ever-changing global world and promote economy growth.” Thus reads the quite florid ‘Mission Statement’ of the Company. When it comes to the economy growth, McGraw-Hill primarily talks about itself of course. The competitors for the top position in the tough business of economy and special interest media are Reed Elsevier and Pearson.
Yet, even McGraw-Hill had to learn the hard way as far as the adaptation to a global world in flux was concerned: For the most part, it were the information and media services that suffered severe declines due to the worldwide media and advertising crisis. What would have been an unthinkable thing to do for McGraw-Hill prior to that point in time, 2001 saw the company issuing a profit warning, despite the fact (according to media reports) that the company was home to the highest-paid management division of all US media companies. CEO Harold McGraw earned 1,116 Million $ plus 1,764 Million $ bonus payments, on top of another two million $ as ‘long-term compensation’ as well as special stock allocations (Restricted Performance Shareholding) worth approximately another four million $. The ‘Performance Bonus Plan’ from 2005 creates even more possibilities for the management to receive an increased number of performance-independent special payouts.
Information and Media Services:
The section combines the company’s special interest and audience media.
Aviation Week Group: Special interest magazines (‘Aviation Week’ and others) about air travel and the aviation business, trade services, databases, books, fairs and conferences.
Business Week Group (In the hands of Bloomberg L.P. since 2009):
‘Business Week’, online services, business week TV. When it comes to information services, the company benefited from the acquisition of the J.D. Powers group. However, the flagship ‘Business week’ which had relied on an aggressive international expansion strategy in China, Poland, Indonesia and the Arabic States (published in the respective native language) faced treacherous waters in 2006. The year saw cuts in circulation and the respective national print issues in Asia and Europe were cancelled. The problems of Business Week triggered some consequences for the personnel: In April 2007, Keith Fox took over the business magazine’s presidency from hapless William Kupper, after the prices for ads had decreased for two successive years.
However, the development of the BusinessWeek-Online Internet platform enjoys a more favourable fate. In 2009, the business magazine was bought by the US-American financial information service provider Bloomberg L.P.
KMGH-TV (Denver), KGTV (San Diego), KERO-TV (Bakersfield), WRTV (Indianapolis) – all stations are connected to the ABC network (Walt Disney). As early as 2007, declines in ad sales on the TV market that decreased the revenue by almost a fifth down to only 23,7 million US-Dollar in the first quarter of 2007 caused quite a few headaches. Another dark cloud on the horizon: The McGrawHill-stations lost their license to broadcast the Superbowl and furthermore, the company ceased to broadcast the successful Oprah Winfrey Show on a national basis.
Healthcare Information Group:
The Physician and Sports Medicine, Postgraduate Medicine Healthcare Informatics, Healthcare Information Programs. Platts: Special interest information for the energy business. McGraw Hill Construction: Special interest information for the construction business. J.D. Power & Associates (since 2005): Marketing-Information, customer surveys, studies on and for the car industry (among others).
As of today, this division if fully operated through the Standard & Poor’s family brand. The services include stock and company ratings (S&P 1200, S&P 500), general finance and company data, company consulting. McGraw-Hill strongly benefited from the rapid development of Standard & Poor. The financial services division increased its revenue by approx. 700 Million $ from 2001 to 2005 and almost doubled the operating profit.
McGraw Hill Education:
McGraw Hill Education encompasses school, education and special interest publishers for all age groups, from pre-school to university. The brands are (among others): CTB/McGraw-Hill, Macmillan/McGraw-Hill, McGraw-Hill Contemporary, McGraw-Hill Digital Learning, McGraw-Hill Higher Education, McGraw-Hill Professional, McGraw-Hill Custom Publishing (Books-On-Demand-Publisher for limited print runs and self-publisher), Wright Group/McGraw-Hill (produces the ‘Everyday Mathematics’ program, which is used by over three million pupils in more than 185.000 class rooms in the US). Also, there are the following international involvements: McGraw-Hill/Ryerson (Canada), Tata/McGraw-Hill (India), McGraw-Hill Interamericana (South America), Open University Press (Great Britain).
Due to the ‘Adoption Cycle’ that is customary in the USA – the majority of the US states decide within a regular cycle of two to three years whether they will acquire new school books – the revenue and return for this sector was much higher in 2005 than the years before. However, because of its size, McGraw-Hill has not much room to expand on the education market through acquisitions in the USA. When Vivendi Universal’s publishing division Houghton Mifflin (yearly revenue: Approx. 2 billion $) was up for grabs as part of their estate in 2003, McGraw-Hill declined as the competition authority would have never agreed to such a jumbo merger.
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