As a successful publishing operation, McGraw-Hill is a textbook case. The McGraw-Hill Companies is a leading producer of textbooks, tests, and related materials, serving the elementary, secondary, and higher education markets through McGraw-Hill Education (MHE). Its McGraw-Hill Financial Services (MH Financial) unit supplies financial and business information services, while its Standard & Poor's (S&P) provides indexes and credit ratings. A fourth unit, McGraw-Hill Information & Media (I&M), publishes trade journals and other industry content (Aviation Week). The company has plans to split in two, dividing MHE from its other assets, which will be called McGraw-Hill Markets.
The company began evaluating its wide range of media and information assets in order to create the most shareholder value in 2010. In response to its declining MHE unit, in 2011 the company announced plans to spin off the education business. The deal is creating two public companies: McGraw-Hill Markets will include assets related to capital and commodities markets, and McGraw-Hill Education will consist of education services and digital learning holdings. McGraw-Hill is making the split to create two more focused and efficient operating companies. The deal is expected to close by the end of 2012.
Previously, the company has been making changes at its S&P business. After the credit crisis and economic downturn, S&P suffered from lost business and regulatory inquiries about the independence of its ratings. The brand took steps to improve its reputation, including making credit ratings more transparent and adopting a new control framework called QCCR (Quality, Criteria, Compliance, and Risk). The business was also aided by companies taking advantage of low interest rates to refinance debt and fund growth in 2010. In response, S&P saw increased demand for its products, and its revenues grew in 2010. Despite these positive developments, in 2011 the brand drew ire from the Obama administration when S&P lowered the US credit rating, resulting in market turmoil.
Another recent divestiture was the 2011 sale of the company's Broadcasting Group (part of I&M), 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 accounted for less than 2% of total sales, to E.W. Scripps, for $212 million.
In other efforts to invest in core assets, the company in 2010 formed MH Financial. The business unit provides global financial information, as well as research and analytics tools, to investment advisors, wealth managers, and institutional investors. MH Financial's flagship product is Capital IQ. In 2010 MH Financial bolstered Capital IQ by acquiring TheMarkets.com, a competing provider of financial data and analytics. It reportedly paid some $300 million for the business. With the purchase, Capital IQ can serve mutual funds and global asset managers, and the deal places McGraw-Hill in a better position to compete with financial data leaders such as Thomson Reuters and Bloomberg.
Revenue declined at I&M, the company's smallest business unit, in 2010. The primary reason for the dip was the divestiture of BusinessWeek. The company sold the unprofitable magazine and related operations, which had been experiencing a steep decline in ad revenue, to financial information provider Bloomberg for about $10.5 million at the tail end of 2009. Bloomberg made the acquisition in order to boost its content and grow its audience; it renamed the publisher Bloomberg Businessweek. As a result of declines in revenue at I&M, in 2010 the unit cut some 230 jobs. I&M also provides energy information to the global oil, natural gas, electricity, and commodity markets through its Platts service. In addition, the unit oversees J.D. Power and Associates, a business that offers automobile ratings.
All total, the company has more than 200 offices throughout the globe. International sales account for nearly 30% of McGraw-Hill's total revenue, with key markets such as India and China growing rapidly. McGraw-Hill expanded in India in 2010 through S&P's purchase of Pipal Research, a provider of business research and investment research services with three locations in India.
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.