Innovation in Publishing

BISG and The Idea Logical Company have started what we think is a very exciting project, which will culminate in the program for Making Information Pay on May 9. We are trying to understand the nature and impact of "experimentation and innovation" in publishing in the digital age—both in attitudes and in practice.

As part of the project we want to collect data via a broad survey on what is now taking place in terms of experimentation and innovation. Using information obtained in the survey, we will then research and write up 8-10 case histories – accounts of experiments that have been tried, whether or not they were deemed to have "succeeded". The findings will be presented at the event on May 9.

We would like your help with this project by completing the survey.

The survey is now open and is available on Survey Monkey for voluntary participation, which we hope will be widespread, at your company and all others. To take the survey, please use the following link:

http://www.surveymonkey.com/s.aspx?sm=ttAYUp778M0QmwPd7yOHtQ_3d_3d

The link in this email will work ONCE. The survey, which should take you about 10 minutes to complete, closes on February 21. Please note that the information obtained in the survey will be treated confidentially and no individual responses will be divulged.

We also hope to see you at Making Information Pay in New York City on May 9. Please register for the event at http://www.bisg.org/conferences/mip5.html.

Thank you in advance for your help with the survey.

Best wishes.

Michael.

Michael Healy
Executive Director
Book Industry Study Group.

Telephone: 646 336 7141.

Hachette Reports

Lagardère the French conglomerate that owns the book publishing unit Hachette published their full year results yesterday. They reported group revenues up 8.5% over the prior year and 3.3% up on an apples to apples basis. The wide disparity was due to the full year inclusion of the Time Warner Publishing Group (now Grand Central) in the current year's numbers. This is a widely dispersed conglomerate but the news report did carve out the publishing unit for praise as follows:

Publishing (formerly the Books division) – Excellent quarter in virtually all the countries in which we operate. Sales were particularly robust in the United Kingdom, driven by a raft of successful fiction and non-fiction titles. The very strong growth in the United States since January 2007 was maintained. In France, Literature and Illustrated Books both ended the year strongly.

For the full year they reported the following:

Revenues reached €2,130m (up 8.6% on a reported basis), including an extra quarter of sales from the Time Warner Book Group (impact: €80m), which in 2006 was consolidated from April 1.On a like-for-like basis, an excellent final quarter propelled full-year revenue growth to 4.7%, versus 3.0% to end September 2007.In the United Kingdom, the year ended with a surge in sales. The group published 7 of the top 10 Christmas non-fiction best-sellers (including Bobby Charlton, Russell Brand and Al Murray), and 5 of the top 10 fiction titles (including Martina Cole and Patricia Cornwell).In the United States, the strong growth seen since the start of the year continued, driven by best-sellers (including Patterson, Baldacci, Hitchens and Meyer) and healthy backlist sales. In France, the fourth quarter was boosted by a fine contribution from Literature, thanks to authors such as Simone Veil and Philippe Claudel. Illustrated Books also enjoyed solid year-end sales.In Spain, sales are traditionally sluggish in the final quarter. Over 2007 as a whole, Spain recorded further strong growth not only in Education, but also in General Publishing and Children’s Books.Finally, Part-Works ended the year well, with steady sales growth in Italy, the United Kingdom and Japan.

In related French publishing news, France's number two publisher Editis has been placed on the block by its private equity owner Wendel. (Reuters) The company is said to be worth approximately €900mm. Spanish publisher Planeta and Italy's Mondadori were immediately suggested as potential purchasers. The following is from their corporate web page:

With 2400 employees and about 40 publishing imprints, Editis holds leading positions in three segments of the publishing business, in particular Literature (trade and mass market formats), Education (scholarly, scholastic aids, middle school, high school, university, legal and medical), and Reference (dictionaries and encyclopedias), as well as in the field of publishing services (promotion and distribution). Prestigious publishers and efficient group-wide services have made Editis number two in the world of French publishing and a major player in Europe. Editis has a clearly stated objective: to strengthen its position on the French market, to continue its growth, and to expand its influence throughout the French-speaking world.

I have noted Editis once before. On their web site they offer their take on the future of the book/reading experience. It is in French but none the less interesting. Here.

TV Guide

There is a dearth of deep bibliographic information available on television programs. Some information is collected by TV Guide as part of its programming but they haven't databased the full history of broadcast TV and as more and more TV programming is available for sale and download the requirements for deeper bibliographic details here increase. It is a business opportunity for someone who likes television. With the data that TV Guide does have, it has never appeared interested in becoming a database provider - in addition to publisher of the magazine. Opening up their database via data sales, widgets/asp, services etc. would seem to me to be an imperative given the rapid decline in the fortunes of the magazine. The company struggled mightily with the development of their online presence and they still have not been successful creating a portal or destination site for television fans.

That said Gemstar/TV Guide is in the process of being acquired for well over $2billion. The company purchasing Gemstar is Macrovision and not an obvious acquirer.

Macrovision offers content protection, digital rights management, and software licensing solutions that enable businesses to maximize the value of their digital content and software products. Our solutions are deployed by companies in the entertainment, consumer electronics, gaming, software, information publishing and corporate IT markets to solve industry-specific challenges.

They are not a database or information management company, but they do (I think) realize that use of bibliographic information in the businesses they own could be an advantage.

It doesn't appear however, that they couldn't achieve the same advantage by licensing the data rather than paying over $2bill for a company which not only is a debatable fit with Macrovision but has its own questionable history of business execution and business strategy. Since the announcement of the purchase Macrovision shares have fallen significantly (although so has the market as we all know) as have shares in Gemstar. Shareholders of Macrovision are not excited about this deal and there is some potential that the deal will get derailed. At the least, it seems the deal should get revalued and pressure for this should become more acute when Gemstar release their latest quarterly results in mid February.

More from Mediapost.

Harpercollins Rebounds

After a slow start to fiscal 2008, Harpercollins seems to have rebounded and reports sales up moderately from $393mm to $406mm for the quarter. Operating profit improves nicely up $13mm to $67mm.

As quoted in Publisher's Weekly, Jane Friedman noted

"I’m very happy about the recovery this quarter. I thought it would happen, but until it does you hold your breath.” She also noted that the improvement was driven by what Friedman called the “three Ds,” The Daring Book for Girls, The Dangerous Books for Boys and Deceptively Delicious. The three titles are continuing to sell well into the third quarter, and Friedman said the titles should become strong backlist works.

From the Newscorp Press release:

HarperCollins reported second quarter operating income of $67 million, an increase of $13 million versus the same period a year ago, which included charges due to the bankruptcy filing of a major distributor. The 24% growth included strong sales of The Daring Book for Girls by Andrea J. Buchanan and Miriam Peskowitz, The Dangerous Book for Boys by Conn and Hal Iggulden and Deceptively Delicious by Jessica Seinfeld. During the quarter, HarperCollins had 40 books on The New York Times bestseller list, including 5 titles that reached the #1 spot.

Given the slow first quarter, HC remain short of its prior year sales and operating income numbers. No mention of HC on the earnings call with Newscorp management which is true to form.

New York Times

Marc Andreessen writes on the 'deathwatch' of the New York Times. It isn't much more than most of us will have heard about as the company released their latest financial reports; however, the review of the current board membership is a bit of an eye opener.

On another note, I have commented on The Times a number of times (link below). Currently, I only purchase the Sunday print version. Generally as I sit reading with the TV on, their ad comes on selling subscriptions to the print. It happens with regularity, and yet as you might watch a slow moving train approach a cliff, I always seem to watch and listen. As their subs and newsstand sales fall off a cliff there is almost no indication to the wider world that this company has an online strategy. The thinking seems to be if they promote the website, About.com or even the Times Reader that will accelerate the migration away from print and so they are prohibited. Most other information companies try to accelerate the migration but then these companies have figared out a new revenue model which NYTimes hasn't.

But really, these ads are horrible and exemplify better than anything else their lack of understanding of the new media landscape. Print ads on TV, what could be worse when you should be an internet company?

Giants

I don't profess to be much of a football fan, but that was some game. In a strange way the last drive had the air of inevitability....Now for the ticker tape parade and it won't be in the parking lot at Giants stadium either.

Google Search By Year

I came across this a few weeks ago and I thought it was very interesting. Google has place where you can see some of their experimentation with new search interfaces. In the Google search box enter the following: joseph conrad view:timeline and you will see a dateline version of the life of Joseph Conrad. It works for all kinds of things: Try replacing JC with Viet Nam War. If you play with this a little you will see that you can narrow down searches within years. As far as I can tell it doesn't do months.



Some of you will recall an interface that OCLC has worked on for authors that is similar. WorldCat Identities looks like this: Conrad



Fellow traveler, Peter Brantley reminded me of the Google interface by referring me to an article in Arstechnica.com. In this post they look at six of the experimental interfaces.


PS. Within three clicks on the Google I was reading a review/appreciation of The Red Badge of Courage written by Conrad himself. Again, yet another reason to want to be be a high school student today.

Microsoft to Buy Yahoo for $44Billion

The dam has finally busted. Will Microsoft be able to pull off the deal to buy Yahoo and then, more importantly will they be able to make a success of the integration. This could be one of the most exciting news stories of the year. Will this be welcomed by Yahoo? Is this the big deal that Terry Semel was said to be working on only yesterday? Could Yahoo look for some other combination - with Ebay - and act defensively to stop the acquisition? The current offer is very expensive - 60% over the closing share price yesterday.

AP
Timesonline.
NYTimes

Amazon Versus Apple: Is This A Cage Fight?

Amazon is buying Audible.com for $300mm: This changes everything. Audible is already a destination site for Audio books (and content) what more appropriate gateway exists to boost the growing (e-)book content that Amazon is selling via their Kindle? As I speculated a few weeks ago, the Kindle will be a delivery platform for content (not just e-books), and it doesn't take too much imagination to see how Audible's content fits very nicely with the Kindle strategy. Audible has also taught their users about the benefits of subscribing to content and have proven that this model can be successful. So, not only does the Audible acquisition have the potential to bring new customers to the Kindle platform (on the basis of a subscription model for content), Amazon.com will also gain the expertise of staff at Audible who has built up this program. Extending a subscription model to content presages the resurrection of the Book Club model. Didn't we all know it would come back? (Well maybe not, but Bertelsmann were spied coming out of Madame Radzwilli's House of Fortunes just the other day).

Strategically, this acquisition makes fundamental sense at the product level alone. Coupled with an increasing need for Audio versions of text (what with our aging population) with the already loyal Audible customer base there is little to argue about. And I do believe, it will escalate a change in business model for trade (consumer) publishing content.

How publishers react to the news will be interesting to watch. Most will not see the significance and many will be happy at the increased exposure that audio books will get as part of the Amazon.com empire. Where there is concern, it will orient itself around the realization that even greater market power will be exerted (either overtly or not) by Amazon. Given my comments above, this acquisition could represent an end-run of the order of I-Tunes. Look how music publishers are now tied to the $0.99 cents per song model. It just snuck up on them. Will the same happen to book content?

Which brings me to my last comment: It is all out war with Apple. (In fact, I would not be surprised to see a competing offer for Audible. I know Apple are not in the content owning business but they might do it to be mischievous or to protect a budding position in the book market). There has been some speculation about whether Apple would develop an e-reader device as part of the I-Phone. Despite his comments to the contary, I believe Jobs was planning some development here and I speculate that Amazon thought so as well. Amazon will do everything they can to keep Apple out of the content distribution/platform business. Apple for their part don't want Amazon's movie and music distribution (or the Kindle) to challenge iTunes. How this rivalry plays out will be very interesting to watch. They both come at the issue from completely different starting points.

NYTimes

Traditional Marketing is 40% Less Important

The editors at Publishing Trends have annouced the results of their recent online marketing survey which indicates that 40% of book publicists believe traditional marketing makes less of an impact than two years ago. The Publishing Trends survey reveals that nearly all book publicists (70.9%) claim to devote up to half their resources to online marketing, but that the New York Times and Publishers Weekly still make the most impact when it comes to publicizing new titles.

Publishing Trends emailed the survey early in January to publicists at publishers, independent publicity firms, and agencies, and sent a companion survey to members of the book-related media, both online and off. Though most publicists polled say they devote up to 50% of their resources to online marketing, 90% of the publicists working at publishing houses say they should be doing more.

While their publicity counterparts did not reach a consensus, media respondents consider online marketing a “must” for Technology, Travel, Business, Sci-fi, and Health titles. When asked to describe in their own words what the online book marketing world will look like in five years respondents predicted “smarter, more targeted practices,” “all authors MUST blog and have scheduled chats,” and “huge increase in digital content.”

What are the obstacles keeping publicists from doing more online marketing? Not having enough time to explore it (67.1%), cost (52.9%), lack of technology know-how (31.4%), and luddite bosses (5.7%) rank the highest.

For further information or a copy of the article, go to publishingtrends.com.

Amazon.com Reports Full Year Up 39%

Amazon.com announced strong fourth quarter and full year results yesterday. Full year net sales increased 39% to $14.84 billion (35% excluding the $0.40 billion favorable impact from changes in foreign exchange) versus net sales of $10.71 billion in 2006. Full year operating income increased 69% to $655 million (61% excluding the $29 million favorable forex impact) versus operating income of $389 million in 2006. Net income increased 150% to $476 million in 2007, or $1.12 per diluted share, compared with net income of $190 million, or $0.45 per diluted share, in 2006. Press release

Other highlights from the press release included the following:

• The Company introduced Amazon Kindle, a revolutionary wireless portable reader that provides instant wireless downloads of more than 90,000 books, blogs, magazines and newspapers to a crisp, high-resolution electronic paper display. The Amazon Kindle team is scrambling to increase manufacturing, as demand remains higher than supply. Kindles are being delivered to customers on a first come, first served basis.
• Amazon MP3 added DRM-free music downloads from Sony BMG Music Entertainment and Warner Music Group, making it the only retailer to offer DRM-free MP3 music downloads from all four major music labels as well as over 50,000 independent labels. The MP3 store now includes over 3.4 million songs from more than 270,000 artists. Pepsi will debut the Pepsi Stuff Amazon MP3 promotion, a massive collect-and-get program, during the upcoming Super Bowl.
• Over 330,000 developers have registered to use Amazon Web Services (AWS), up more than 30,000 from last quarter.
• Adoption of Amazon Elastic Compute Cloud (EC2) and Amazon Simple Storage Service (S3) continues to grow. As an indicator of adoption, bandwidth utilized by these services in fourth quarter 2007 was even greater than bandwidth utilized in the same period by all of Amazon.com's global websites combined.
• AWS launched a limited beta of its SimpleDB Service, which allows queries to run on structured data in real time. This service works in conjunction with Amazon EC2 and Amazon S3, collectively providing the ability to store, process and query data sets in the cloud.
• AWS launched European storage for Amazon S3, allowing software developers and businesses to store their data physically in Europe. Amazon S3 is a storage service in the cloud offering software developers and businesses low-cost access to the same scalable and reliable storage infrastructure Amazon uses to run its own global network of websites.
• North America segment sales, representing the Company's U.S. and Canadian sites, were $3.08 billion, up 40% from fourth quarter 2006.
• International segment sales, representing the Company's U.K., German, Japanese, French and Chinese sites, were $2.59 billion, up 46% from fourth quarter 2006. Excluding the favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, International sales grew 35%.
• Worldwide Media sales grew 33% to $3.33 billion in fourth quarter 2007, compared with $2.50 billion in fourth quarter 2006.
• Worldwide Electronics & Other General Merchandise sales grew 58% to $2.21 billion in fourth quarter 2007, compared with $1.40 billion in fourth quarter 2006, and increased to 39% of worldwide net sales compared with 35%.
• A record number of customers took advantage of Amazon Prime, the Company's unlimited free-shipping program. Amazon Prime is now available in the U.K., Germany, Japan and the U.S.
• Amazon.com shipped over half-a-million units in fourth quarter 2007 on behalf of sellers who utilized the Fulfillment by Amazon service.

Notable comments from the conference call transcript (SeekingAlpha):

On their outlook:

For calendar 2008, we expect net sales of between $18.75 bllion and $19.75 billion, a growth of between 26% and 33%. This guidance anticipates greater than 200 basis points of positive impact from foreign exchange. GAAP operating income to be between $785 million and $985 million, or between 20% growth and 50% growth. This includes approximately $240 million for stock-based compensation and amortization of intangible assets. We anticipate 2008 consolidated segment operating income, which excludes stock-based compensation and other operating expense to be between $1.025 billion and $1.225 billion, or between 21% growth and 44% growth.

Some interesting comments on the Kindle from Bezos:

Well, the Kindle has a few experimental features that are -- some of which are visible on the Kindle. It has something call a Now-Now, where you can type in any question and using the Mechanical Turk in the background, which is one of our web services, that question gets answered and the answer to the question gets displayed on the Kindle. There is an experimental web browser on the Kindle, which is actually, for a mobile device, a pretty good web browser, and of course is has the Whisper Net EVDO connectivity, which gives you broadband wireless access to that web browser.
So there are a number of experimental features and we’ve put those on there and made them accessible to customers so that these early Kindle users can tell us what they think of those features, whether we should continue to invest in them, continue to work on them and make them part of the product.

And answering a question on Kindle demand:

Yeah, Kindle is, in terms of demand, is outpacing our expectations, which is certainly something that we are very grateful for. It’s also on the manufacturing side causing us to scramble. We’re working very hard to increase the number of units that we can build and supply per week, so that we can get back -- our goal is to get into a situation as quickly as we can where when you order a Kindle, we ship it immediately. That’s the standard we want to hold ourselves to and we are working very hard to get there. We are super-excited by the very strong demand.

Borders Australia

For those waiting for resolution of the review by the Australian Competition Commission, you will have to wait another week. No explanation given, although from the documentation on their web site it does look like they need more time to review additional material they have requested from A&R/Whitcoulls who are the likely purchasers. Feb 6th is now the expected date.

Executable ISBNs: Not As Dull As it Sounds

Exact Editions are doing some very cool things with magazines and they like to build technical solutions that solve interesting problems. They have been working with The Bookseller, and as a derivative of this work they came up with a way for ISBNs listed in some of The Bookseller publications to become executable. Why this is interesting is that the widget they have built effectively 'picks' up the ISBN of the static page and takes you to a web site which at this point is Google. (BTW, Exact Editions are using the same or similar tool to pick up things like phone numbers off the pages of the magazines in their e-Catalog).

The Bookseller produces a buyers guide which I liked so much we copied the whole thing for the US market when I was at Bowker. (Even down to the color coding). As a simple listing within subjects it always retained significant value for buyers. Enabling a user to click on an executable ISBN and create a list, learn more about the title, navigate to the publisher or a retailer makes this widget both really cool and really functional. And isn't that exactly what you want.

The application is still experimental and according to Adam Hodgkin at Exact Editions they showed The Bookseller staff the application and they liked it so much they put it up immediately; hence, they are likely to change how it works as they see how it is used. To see it click here and then go to the What's Hot nav bar and click on Buyers Guide. Chose one of the covers on the page. Once inside the guide, go to any pages and run your cursor over the page. Each ISBN will light up inside a green box. You are on your own from that point.

My thoughts expressed to Adam were as follows:

This bookseller thing is great. So easy. I think there should be a store front however instead of Google. I understand the agnosticism but if I am clicking on the isbn – effectively either looking for more information or wanting to buy – it could be an anti-climax getting steered to Google. What The Bookseller should do is build dynamic pages that once someone clicks on the Isbn they come to a retail outlet page where the user can see the book vended from four or five or six possible vendors. The Bookseller could sell each of these slots or storefronts. Perhaps also, the landing page could show more from that publisher which again would be potential ad sales
revenue for The Bookseller.

Booksellers and librarians who use these guides and who migrate their book browsing to the web will really enjoy using this application and it will be interesting to see how it evolves. The Exact Editions widget application could also be implemented at other publications - consumer magazines, newspapers, reviews publications for example - that will make it easier for consumers to create their own buy lists and shopping carts without having to scribble down titles or rip pages out of magazines.

Interestingly, the gap between The Bookseller site and Publisher's Weekly continues to grow to PW's disadvantage IMHO.

Haights Cross For Sale

Haights Cross, which went through a corporate recapitalization last year has announced that it is placing itself up for sale. From the press release on the company's web site:

Paul J. Crecca, HCC’s President and Chief Executive Officer, commented: “Upon the completion of our recapitalization in August 2007 and the constitution of our Board of Directors, we indicated we would evaluate all strategic alternatives, including the possible sale of all or substantially all of our assets. Throughout this process, the Haights Cross businesses and our committed employees have remained focused on providing customers with quality products and services, and thus strengthening their positions in the markets they serve. We believe that despite the current economic environment, these assets offer compelling value to prospective buyers.”

The company indicated that Evercore Partners would conduct the sale.

The Aussies aren't done with Beah

After last weeks rebuttal by Ishmael Beah regarding the points raised by The Australian newspaper, the journalists have come up with a point by point refutation of his argument. Essentially, they contend he still has not accounted for the fundamental inaccuracy in the book, and while the central element regarding his story is the length of time he served as a 'child soldier', other inaccuracies are also coming to light.

Commenting in their article The Australian says in part,

The Australian has believed that those inaccuracies were a result of Beah's memory being impaired by the trauma, drugs and extreme youth he describes in his book but the latest statement by Beah, who is now 27, and his publisher Sarah Crichton of Farrar, Straus & Giroux seriously misrepresent The Australian's reporting over the last week.

Beah is not going to change is story and perhaps there is a ready and acceptable notion in the minds of those familiar with the story that perhaps he suffered so much (and is a symbol of many other lost children) that we should therefore forgive some minor infraction. I was however, surprised at the view taken by Publisher's Weekly which effectively apologizes for every authors confusion with reality and fiction.

In this country, it's commonly known in the publishing industry that memoirs—even post–James Frey—are not stringently fact-checked; at most, they're submitted to legal departments looking for libel. Writers are responsible for their facts, and editors for probing their writers' hearts and souls and memories. In the case of A Long Way Gone, however, an excerpt (including the now-disputed dates) was fact-checked by the New York Times last January. “The fact-checking, as often happens, turned up a few discrepancies that were resolved without undermining the plausibility of his account,” Times spokesperson Diane C. McNulty said in an e-mail.

Apologizes but doesn't hold anyone accountable. PW goes on to say that in the memoir world no ones memory can be completely verified but in this case (and in countless others) just some basic fact checking might have raised a few flags. Note also, the incredible amounts paid for celebrity and political memoirs: Are we now to believe these might contain only a casual relationship to reality or are they true and close depictions of reality as the author knew it at the time. Possibly both. This book was sold as 'a truth' and in the pursuit of that truth it looks like anyone asking any pointed questions was patronized and rebuffed. Surely there are enough 'real' memoirs worth reading without embellishment and Long Way Gone is a case in point.

Hold on to your Sari

Reaction to the news that Mills & Boone are entering the Indian marketplace with a direct publishing operation could elicit a 'Duh!' especially, if you had any exposure to a Bollywood movie. Harlequin, owners of M&B has announced that they will be publishing locally produced romance titles in India later this year. The task looks slated for success on a number of fronts not least of which are the potential size of the Indian market and the veritable feast of potential story derivations. In fact, all they will need to do is copy the scripts of the 300 or so movies that are released each year and they will be on a winner.

From the TimesOnline:

“India is crazy about true romance,” Andrew Go, the head of the Indian operation, said. “Look at the basic Bollywood plot: boy meets girl; conflict; happy ending. We carry across that trend. We say we sell four books a second, Actually it’s 4.4. If I can take that to five, I’m a hero.”

India has the potential to hit Mr Go’s target: the popularity of the country’s lending libraries is declining as India’s burgeoning middle class opts to buy rather than borrow.

Interestingly, the expectation for success continues to rely on printed products. It will be interesting to see if Harlequin sees more rapid growth in their electronic products in this market where travel and access to products is still a challenge.

The company plans to follow formula similar to their developed markets which will include solicitation of local authors. They intend to offer some guideance to aspiring authors on the site. One thing they will change is to lower the hear somewhat which is unlikely to please Richard Gere.

For the Reader Who Has Everything

Tom Stoppard in the NYTimes this morning about his book satchel by T. Anthony. So, if you are wondering what to buy that avid reader, or if you are like Mr & Mrs. PND who, when travelling on vacation distribute their travel reading material across several suit cases, this is the gift for you. Unfortunately, T Anthony stopped making the book satchel many years ago and so you may be SOL. I quick check on Ebay this afternoon proved fruitless.

McGraw Hill Results

McGraw Hill reported their full year results on Thursday with revenues and net income up versus 2007. Revenues for 2007 of $6.8Billion were 8.3% higher versus 2006 and 2007 net income of $1.0billion was 14.9% higher versus 2006. Their stock price also got a kick on their more encouraging outlook for 2008. The company said they expect revenue growth in 2008 of 6% to 8% at McGraw-Hill Education and Information & Media, and a 2% to 4% increase at Financial Services. This exceeded analysts expectations.

Shares rose as much as 12.5 percent. Chief Executive Harold McGraw said he expects the U.S. economy and capital markets to show signs of recovery in the
second half of 2008, though a "housing recession" will likely persist all year. McGraw-Hill also publishes school textbooks and magazines such as BusinessWeek,
and owns researcher J.D. Power & Associates.

Despite these full year numbers, the company's results were significantly impacted by a slow fourth quarter - mainly due to the slow-down in credit market - and net income was almost half the level the company recorded in 2006. Revenues were off 1.5% versus 2006.

Other highlights from the press release:

Education: "Revenue for this segment in 2007 increased 7.2% to $2.7 billion compared to 2006. Operating profit in 2007 grew by 21.5% to $400 million. Included in the segment's 2007 operating profit is a pre-tax restructuring charge of $16.3 million in the fourth quarter for severance relating to a workforce reduction of 304 positions. In 2006, there were pre- tax restructuring charges of $5.6 million in the third quarter and $10.4 million in the fourth quarter.

Financial Services: "Revenue for this segment in 2007 increased by 10.9% to $3.0 billion compared to last year. Operating profit grew by 13.1% to $1.4 billion. Included in the segment's operating profit is a pre-tax gain of $17.3 million on the divestiture of a mutual fund data business in the first quarter and an $18.8 million pre-tax restructuring charge in the fourth quarter consisting mostly of severance relating to a workforce reduction of 172 positions, driven by the current business environment, as well as the consolidation of business support functions.

Information & Media: "Revenue for this segment in 2007 increased 3.6% to $1.0 billion compared to last year. Operating profit grew 27.2% to $63.5 million. Included in the segment's 2007 operating profit is a pre-tax restructuring charge of $6.7 million in the fourth quarter for severance relating to a workforce reduction of 114 positions. In 2006, there were pre- tax restructuring charges of $5.7 million in the third quarter and $3.0 million in the fourth quarter. The operating margin for 2007 was 6.2% versus 5.1% in 2006. Foreign exchange rates did not have a material effect on revenue, but reduced operating profit growth by $4.6 million.

Pearson Get Merger Clearance with Divestitures

Pearson received clearance from the US Justice department for the completion of their $950million acquisition of Harcourt Assessment which they purchased from Reed Elsevier. The court required that they divest a number of products which on the surface appear inconsequential to the entire deal. From PRnewswire:

"Without the divestitures obtained by the department, purchasers of clinical tests for adaptive behavior, speech and language, and adult abnormal personality likely would have faced higher prices and reduced innovation as a result of this transaction," said Thomas O. Barnett, assistant attorney general for antitrust, in a statement.

Under the terms of the proposed settlement, Pearson and Harcourt must divest: Harcourt's adaptive behavior clinical test, the Adaptive Behavior Assessment System; Harcourt's adult abnormal personality clinical test, the Emotional Assessment System, which is under development; and in the speech and language clinical test market, either Pearson's Comprehensive Assessment of Spoken Language and the Oral and Written Language Scales or Harcourt's Clinical Evaluation of Language Fundamentals. Under the proposed settlement, the Department's Antitrust Division must approve the buyer of each of the divested assets.

Given the breadth of the Harcourt and Pearson assessment offerings this resolution looks inconsequential; the subject areas are fairly narrow and specialized. Also, the release doesn't indicate whether Pearson is precluded from competing in these segments at some point in the future. There is likely to be any number of potential buyers - Reed Elsevier may buy them back, Wolters Kluwer may also be interested given their existing health titles.

A Marathon

My friend and one-time collaborator is running the London Marathon and is looking for sponsors. Here is his note:

After my 37 years in the business, I'm running the 2008 London Marathon for the UK book trade's welfare charity, BTBS. You can make a contribution at http://www.justgiving.com/michaelholdsworth [or see below if you don't like using a card online.] Since I did my last Marathon aged 50 (and before that, at age 40), 2008 - at 60 - is appropriate, I guess. As you will know, BTBS is a very small charity and every little bit helps proportionately much more!Best as ever - and thanks in advance for anything you care to contribute. Michael

So as my mother in law would say 'take the rubber-band off your wallet' and give him and the charity some help. If nothing else wish him well. Last year it was very hot.