S&p Global Inc. · NYSE:SPGI
S&p Global — The McGraw-Hill Companies — UBS 38th Annual Global Media and Communications Conference 2010
29 slides from S&p Global's conference presentation, Dec 6, 2010
Slide 1: UBS 38th Annual Global Media and Communications Conference
UBS 38th Annual Global Media and Communications Conference December 6, 2010 1 Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies Presented at the UBS 38th Annual Global Media and Communications Conference December 6, 2010 2
Slide 2: Safe Harbor Statement Under The Private Securities Litigation Reform Act of 1995
“Safe Harbor” Statement Under The Private Securities Litigation Reform Act of 1995 This presentation includes certain forward-looking statements about our businesses and our prospects, new products, sales, expenses, tax rates, cash flows, prepublication investments and operating and capital requirem
Slide 3: Outlook for 2011
Outlook for 2011: Another year of growth • We will be building on a record of achievement in 2010 • Will provide 2011 guidance on Feb. 1, 2011 when 4Q earnings are announced 5 Important actions in 2010 to prepare for 2011 • Increased leverage and opportunities for growth in financial markets • Stren
Slide 4: New leadership at MHP
New leadership at MHP • Jack F. Callahan, Jr. is the new chief financial officer of The McGraw-Hill Companies – Most recently CFO at Dean Foods – Held senior management roles at PepsiCo, General Electric, and McKinsey and Company • Held financial and operational positions around the world including
Slide 5: The strategy for McGraw-Hill Financial
McGraw-Hill Financial 9 The strategy for McGraw-Hill Financial • Tested strategic concept for McGraw-Hill Financial since 2008 • New management structure to help integrate core capabilities and create innovative financial information products • Successful new integrated product introductions – Risk2
Slide 6: Continuing to build and expand at Capital IQ
Continuing to build and expand at Capital IQ • Acquisition of TheMarkets.com enhances Capital IQ’s ability to offer core data for buy side – Earnings models – Estimates – Fixed income research • Capital IQ expects to: – Add clients – Grow in domestic and international markets – Create cost synergies
Slide 7: Innovation at S&P Indices
Innovation at S&P Indices: Setting the stage for growth in 2011 • Japan: First locally listed S&P 500 ETF began trading in Asia on the Tokyo Stock Exchange in October • China: S&P has a license agreement with Bosera Asset Management to create ETFs in China next year using the S&P 500 • Europe: ETFs
Slide 8: How S&P Indices generates revenue
How S&P Indices generates revenue • Fees based on assets under management in investment vehicles like exchange- traded funds • Royalties based on trading volume of derivatives contracts • Data subscriptions which support index product management and portfolio analytics • Index-related licensing fees
Slide 9: Why S&P ratings is better positioned now to respond to regulators
Why S&P ratings is better positioned now to respond to regulators, markets • S&P has taken steps to: – Improve ratings stability – Add value to ratings through more analysis and features – Increase comparability of ratings – Increase transparency of its processes – Add more checks and balances to th
Slide 10: How S&P has invested to meet new regulations
How S&P has invested to meet new regulations • S&P has developed a control framework called QCCR – Quality – Criteria – Compliance – Risk 19 The costs of creating a framework to deal with regulations • S&P spending for QCCR-related items – 2009: $63 million – 2010: Expect spending to increase by $15
Slide 11: New insight into regulatory issues with passage of Dodd-Frank Act
New insight into regulatory issues with passage of Dodd-Frank Act • Issues with various new rules are being resolved in ways that ensure clarity and that the market runs smoothly – 17(g)5 exemption – Removal of 436(g) exemption and tension with Regulation AB requirements 21 Growth in October and Nov
Slide 12: Favorable market trends: tightening credit spreads
Favorable market trends: Tightening credit spreads Basis One 5 year Points 12/2/10 Month ago 1/1/10 Mvg Avg Investment-grade composite spread 191 200 193 198 Speculative-grade composite spread 584 600 616 579 Source: Standard & Poor’s Global Fixed Income Research 23 Favorable market trends: The outl
Slide 13: Favorable market trends expected to continue in 2011
Favorable market trends expected to continue in 2011 • Low interest rates • Favorable credit spreads • Increased debt funding in public market as banks deleverage • Investor appetite for yield • Growth of large local and regional bond markets led by India • Continued growth of key emerging markets •
Slide 14: Latest developments on litigation front
Latest developments on litigation front • Decisions on our motions to dismiss confirm that it is difficult to mount a legal challenge to ratings made in good faith • Favorable ruling in case of Rice versus S&P and Moody’s in October – Federal district court in California dismissed complaint with pre
Slide 15: Favorable decision in Pennsylvania state court
Favorable decision in Pennsylvania state court – Court permitted only one narrowly circumscribed fraud claim to proceed in event plaintiff can prove a rating agency did not believe a rating it issued – We dispute the claim and do not believe plaintiff can meet the high standard established by the co
Slide 16: New leadership at McGraw-Hill Education
McGraw-Hill Education 31 New leadership at McGraw-Hill Education • Bob Bahash is the new president of McGraw-Hill Education • As long-time McGraw-Hill CFO, Bob also: – Spearheaded off-shoring activities in an effort to better control prepublication costs – Was in charge of manufacturing – Was respon
Slide 17: A wealth of McGraw-Hill educational content already in digital form
A wealth of McGraw-Hill educational content already in digital form • More than 225 apps for the iPad, iPhone and Android now available from McGraw- Hill Education – Deliver digital texts and medical reference guides, interactive study guides and test prep – 60 more apps are planned by 1Q 2011 33 Th
Slide 18: How our customers benefit from an interactive and digital model
How our customers benefit from an interactive and digital model • More digital resources becoming available for students – Online practice sites – Classroom software for interactive whiteboards – “Clicker” response pads 35 Digital transformation is about creating educational solutions • McGraw-Hill
Slide 19: McGraw-Hill Education is focusing on how students learn
McGraw-Hill Education is focusing on how students learn • Tailoring content and functionalities of our digital products to improve our customers’ workflow • Providing students and faculty with tools and resources that were never available before 37 Creating sophisticated, adaptive learning programs
Slide 20: LearnSmart — the virtual tutor
LearnSmart — the “virtual tutor” • Recommends additional study for each student • Lets the student know when a topic has been mastered • Incorporated in McGraw-Hill Connect™, our all-digital assignment and assessment platform for higher education 39 Expanding addressable market by helping college st
Slide 21: Lecture capture — a new opportunity in higher education
Lecture capture — a new opportunity in higher education • Recently acquired Tegrity, a scalable, automated lecture capture service – Core feature of McGraw-Hill Connect – Students can replay lectures and review material presented in classroom anytime, anywhere 41 Partnering to link technology, conte
Slide 22: A new search engine to customize course content
A new search engine to customize course content • Recently introduced McGraw-Hill Create – A Google-like search engine that enables instructors to customize quality content for courses – Instructors can tap a huge database of: • 4,000 textbooks • 5,000 articles • 11,000 readings 43 • 25,000 business
Slide 23: Digital professional products are producing double-digit growth
Digital professional products are producing double-digit growth • Access suite of products in science, technology and medicine continues to attract new subscribers • More than 90% renewal rate for AccessMedicine – Department of Veterans Affairs licensed AccessMedicine at 162 medical centers – New in
Slide 24: Outlook for 2011 el-hi market
Outlook for 2011 el-hi market • Difficult to assess prospects for overall education market at this time • 2010 el-hi market up 3.8% after ten months, according to AAP data – Gain is based solely on results in state new adoption market • State new adoption market, at an estimated $825 million to $875
Slide 25: Federal funding: Another wildcard for education
Federal funding: Another wildcard for education • Congress has yet to enact an education budget for new fiscal year, which started on October 1 – May have to wait until next session of Congress • Grants awarded in 2010 through the Dept. of Education’s special programs are fully funded for their full
Slide 26: McGraw-Hill Education: Prospects for 2011
McGraw-Hill Education: Prospects for 2011 • Federal funds could give intervention and testing a boost • Host of factors will impact the higher education market – Federal funding – Enrollments – Student retention • Will have an assessment of 2011 prospects when 4Q earnings are announced 51 Informatio
Slide 27: Information & Media: Growing digitally and globally
Information & Media: Growing digitally and globally • Subscription-based B2B businesses with leadership positions in the markets they serve • With the sale of BusinessWeek about one year ago, the transformation has become evident in I&M results – Operating margin rebounded into high teens – More tha
Slide 28: Strengthening global coverage across multiple commodities
Strengthening global coverage across multiple commodities • Platts publishes more than 8,500 prices each day – More than 100 are used by the industry as key price benchmarks • Platts continues to launch new price assessments in oil, gas, petrochemicals, and metals – Sets the stage for more growth in
Slide 29: UBS 38th Annual Global Media and Communications Conference
UBS 38th Annual Global Media and Communications Conference December 6, 2010 57
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