Scholastic

About Scholastic

Once upon a time, a company grew up to become one of the world's leading children's book publishers. Scholastic Corporation sells books to children in more than 140 countries. It operates through five divisions: Children's Book Publishing and Distribution; Educational Technology and Services; Classroom and Supplemental Materials; Media, Licensing and – more... Advertising; and International. It owns the rights to properties such as  Goosebumps and The Baby-Sitters Club and is the US distributor of the Harry Potter books, the best-selling children's series of all time. Known for its school book fairs, Scholastic also publishes magazines, textbooks, and software for students and teachers, and produces children's TV shows. 

Geographic Reach

The company generates more than 20% of sales outside of the US. Scholastic has long-established operations in Australia, Canada, New Zealand, and the UK, with newer holdings in China, India, and Ireland. Going forward, Scholastic expects to see strong growth in Asia and improved results in the UK.

Financial Analysis

In 2012 revenue increased by more than 13%, and net income increased by $63 million. The revenue increase is attributed to sales growth in both print and ebook formats of the Hunger Games trilogy, and an increase in the number of book fairs held. In addition, Scholastic reported higher sales of educational technology products and classroom materials, as well as higher international revenues. The net income increase is attributable to the increased revenue and a decrease in bad debt expense.

Scholastic's 2012 cash inflow of $89.6 million is attributable to the cash provided by operating activities driven by increase in net income from continuing operations. It is also the result of decreased cash used in financing activities due to the completion of a large share repurchase pursuant to a modified Dutch auction tender offer.

Mergers and Acquisitions

In order to grow its Children's Book division, Scholastic in 2012 acquired Weekly Reader, an educational magazine designed for the kindergarten through 12th grade classroom. It bought the magazine from Reader's Digest Association for an undisclosed amount, though the price tag was estimated to be less than $5 million.

In 2011 the company acquired Learners Publishing, a Singapore-based publisher of supplemental learning materials for English Language Learners. The acquisition enhanced the company's product offering in the English language learning segment, bringing it to a broader customer base.

Strategy

Television has been a particular area of focus for Scholastic. Its Media, Licensing and Advertising division has built a library of more than 500 half-hour television productions. Titles include Maya & Miguel and The Magic School Bus. In addition, Scholastic has a partnership with NBC  and Telemundo (along with other content and broadcasting companies) to produce and distribute television for children through a venture called Qubo. Spots reinforcing the importance of books and reading play throughout the Qubo programming block, which airs on NBC and Telemundo in English and Spanish.

Ownership

Richard Robinson (a descendant of founder Maurice Robinson) owns more than 18% of the company. – less

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