The McGraw-Hill Companies Inc. (MHP) has decided to dispose its Broadcasting Group with an aim to re-evaluate its portfolio of businesses and concentrate more on global brands, and thereby enhance shareholder value through proper capital allocation. The company recently hired Morgan Stanley (MS) for advice on the divestiture process.
McGraw-Hill, which owns one of the top credit rating agencies (Standard & Poor’s), did not highlight the time limit for the sale of the division.
The Broadcasting Group generated revenue of approximately $100 million in fiscal 2010, up 18% from the prior year. It operates nine television stations (four ABC affiliates and five Azteca America affiliated stations). The company is confident that the strategic locations of these television stations will entice buyers.
McGraw-Hill has ABC affiliates in Denver, Colorado (KMGH-TV), San Diego, California (KGTV), Bakersfield, California (KERO-TV), Indianapolis, Indiana (WRTV) and Azteca America affiliates in Denver, Fort Collins, Colorado Springs, San Diego and Bakersfield.
McGraw-Hill, a publisher and provider of financial information and media services, is also assessing general and administrative expenses to run all its divisions smoothly.
The company had earlier posted first-quarter 2011 results. The quarterly earnings of 39 cents a share beat the Zacks Consensus Estimate of 37 cents, and rose 18.2% from 33 cents earned in the prior-year quarter on the heels of strong performance across Standard & Poor’s unit.
McGraw-Hill continues to expect fiscal 2011 earnings between $2.79 and $2.89 per share.
Total revenue of $1281.9 million handily beat the Zacks Consensus Estimate of $1,266 million and jumped 7.7% from the prior-year quarter aided by growth in the McGraw-Hill Financial, Standard & Poor’s and Information & Media segments. The quarter’s top-line performance was however offset by a decline at its Education segment. The Broadcasting Group registered revenue growth of 10.2% to $20.6 million during the quarter.
Currently, we have a long-term 'Neutral' rating on McGraw-Hill, which competes with Pearson plc (PSO). However, the company holds a Zacks #2 Rank, which translates into a short-term ‘Buy’ recommendation.
MCGRAW-HILL COS (MHP): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
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