Harold McGraw III

1
The McGraw-Hill Companies
Harold McGraw III Chairman, President and
CEO Quarterly Review April 27, 2000
2
The McGraw-Hill Companies

• What the first quarter results demonstrate
• Importance of March business
• Stronger than expected
• Strength of portfolio
• Balance of the lineup
• Transformation of Information and Media Services

3
The McGraw-Hill Companies

• Information and
• Media Services

4
Information and Media Services

• Transforming the business into a B2B franchise
• Focusing on fewer, bigger opportunities
• Expanding globally
• Migrating to the Web

5
Information and Media Services

• Eliminated low-growth businesses
• 1998 Divested computer and communication
  publications
• 1999 Divested chemical and plastic publications
• 2000 Divested Tower Group International

6
Information and Media Services

• McGraw-Hill Energy Information Group
• Combines all our energy assets
• Worlds largest and most complete source of
  energy market information

7
Information and Media Services
Information and Media Services

• B2B Hubs
• Construction
• Energy
• Aviation

Business Week
Broadcasting
High margin, cash generating network affiliates
1 global business magazine in print and online
Leading hubs for content, community and
commerce across all media

• 1 market positions
• Scale and critical mass
• Significant growth opportunities

8
Information and Media Services

• B2B Markets
• Number 1 provider of proprietary content
• Trusted brands
• Relationships with key players

9
The McGraw-Hill Companies

• Leveraging opportunities via the Web
• Advertising and sponsorships
• Subscriptions
• Sales of services
• Transaction facilitation

10
Information and Media Services

• User sessions up 35 since in first quarter

Page views up 16 in first quarter
Mar 00
Mar 00
Dec 99
Dec 99
1,405,266
1,894,405
15.5 million
18 million
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Information and Media Services

• User sessions increased 19 since launch

Page views up 105 in first quarter
Mar 00
Mar 00
Dec 99
Jan 00
250,261
297,735
.8 million
1.6 million
12
Information and Media Services
User sessions increased 58 in 1Q
Page views increased 49 in 1Q
Dec 99
Mar 00
Dec 99
Mar 00
568,375
899,395
2.9 million
4.3 million
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Information and Media Services

• Construction.com
• Project Marketplace Enabling professionals to
  do their jobs faster, better and at less cost

Find a project
Search among 500,000 projects based on criteria
such as size, type, location, bid date and 70,000
blueprints in digital form (Dodge)
Prepare a bid
Obtain detailed project specs, digital
blueprints, cost estimates to prepare bid
Bid for project
Submit bid and related documents online (in
development)
Manage project online
Set up Web-based collaboration network to
exchange documents, project management, site
videos
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Information and Media Services

• Construction.com
• Product Marketplace (Sweets)
• 1,600 manufacturers and detailed specifications
  more than 25,000 building products
• Link buyers and sellers
• Downloadable CAD files
• Industry news, latest developments

15
Information and Media Services

• eLeads Newest Web Application
• Penetrating low-end of construction market with
  cost-efficient method
• Web opens up market too expensive to reach with
  traditional ways
• Small general contractors, local distributors can
  access Dodge database
• Price 19.95 a month for up to 10 leads

16
Information and Media Services

• Dodge
• Shifting to electronic distribution
• Closed 27 plan rooms in 1999 more likely in 2000
• Sold 5 printing centers in 1999

17
Information and Media Services

• Energy is next
• Phase 1 Ready by end of May 2000
• Will provide critical pricing information for
  oil, natural gas, electricity
• One click away from transactions

Prototype screen of new Platts.com Web site
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Information and Media Services

• Business Week
• Creating a global information franchise in
  print and online
• Registered users4Q 99 620,0001Q 00
  765,000

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Information and Media Services

• Business Week Online
• Daily Briefing
• 15-20 original stories from the editors
• Interpreting key developments in business
  world

20
Information and Media Services

• Business Week Online
• Expanding a channel
• Creating co-branded recruitment channel
  Heidrick Struggles
• Career news, analysis and advice from BW
• e-recruitment from Heidrick Struggles

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Information and Media Services
Business WeekAd pages up 32.3 for the first
quarter

• High tech 39
• Financial 45
• Autos 5.8
• Industrial materials 11.6

22
Information and Media Services

• Business Week
• Second quarter ad pages through May 1 up 46
  over 1999
• Year-to-date Up 37.3

23
Information and Media Services

• Business WeekPremium rates for e.biz supplement
• - 1Q 99 1 section with 34 ad pages
• - 1Q 00 2 sections with 182 ad
  pages
• - 2Q 99 No sections
• - 2Q 00 3 sections

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Information and Media Services

• Broadcasting Stronger in 2000
• First quarter
• Political advertising
• Super Bowl advertising
• Second quarter
• Double-digit pacings

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Information and Media Services

• B2B Group - 1Q

• Revenue up
• Investments in new Web sites reduced profits

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The McGraw-Hill Companies

• Information and Media Services

• A strong foundation for growth
• Accelerating Internet initiatives with leading
  hubs in markets where we have scale and critical
  mass

27
The McGraw-Hill Companies

• Educational and
• Professional Publishing

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Educational and Professional Publishing

• Increasing use of technology in college
  classrooms

• Web pages More than 25 of courses now have a
  web page
• E-mail Over 50 of courses use e-mail compared
  to 20 in 1995

We provide digital solutions
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Educational and Professional Publishing

• ALEKS
• Web-based artificial intelligence system
• Determines math abilities and provides
  individualized instruction
• First and second year college math markets

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Educational and Professional Publishing

• Growth of PageOut websites
• 10,000 in U.S.
• 1,000 in Canada
• Being introduced overseas

Macroeconomics
Computing
Chemistry
PageOut enables professors to create course Web
sites
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Educational and Professional Publishing

• Online Learning Centers
• Online quizzes and lecture materials for students
• Access via McGraw-Hill sites or through
  partnerships
• 150 sites to date

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Educational and Professional Publishing

• Interactive e-books

• Digitized content from text and other sources
• Delivery via the Web or CD-ROM
• 25 titles in 2000

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Educational and Professional Publishing

• E-books Changing the marketplaces dynamics
• Material regularly updated
• Make used-books obsolete
• Versatile features
• Allow us to win back this market

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Educational and Professional Publishing

• Distance Learning
• Creating tools to reach a growing market
• Online courses for business and industry
• Pursuing alliances with major universities

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Educational and Professional Publishing

• Technology in el-hi market
• Will increase as more schools connect to
  Internet, upgrade computers

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Educational and Professional Publishing

• Elementary-high school market
• The McGraw-Hill Learning Network
• Goal Connect teachers, parents, students
• Beginning with Learning Store, launched Jan. 2000
• Interactive games, assessment improvement
  strategies

www.mhlearningstore.com
Prototype screen from The McGraw-Hill Learning
Network
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Educational and Professional Publishing

• Digital strategy at Professional Book Group
• Growth through online retailing
• Revitalized backlist sales for 7,000 titles
• Efficient short-run presses keep titles in print
• Distribute through online channels
• Corporate intranets, netLibrary, Rocket books
• Turn major titles into online subscription
  services

38
Educational and Professional Publishing

• Digital strategy at Professional Publishing

• Access Science
• Turn major titles into Web-based subscription
  services
• Launched April 2000
• Based on Encyclopedia of Science and Technology

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Educational and Professional Publishing

• New economic model
• Today, printing, binding and related expenses
  21-23 of costs
• Distribution over Web will cut costs
• Web-based materials will continue to replace hard
  copy sales

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Educational and Professional Publishing

• Social studies, science, reading and literature
  in 2000
• California
• Texas
• Florida

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Educational and Professional Publishing

• Key adoptions
• Texas
• Expect 35 market share for reading
• California
• Social Studies Expect to lead market
• Science Expect Glencoe to dominate School doing
  well, we may lead K-12 market
• Literature Glencoes first entry into market
  impressive start

42
The McGraw-Hill Companies

• Educational and Professional Publishing
• Good year taking shape
• Using technology to grow revenue,lower costs

43
The McGraw-Hill Companies

• Financial Services

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Financial Services

• SP Information Services
• Selling direct avoids royalty fee
• Leader in providing news and quotes to Internet
  redistributors

45
Financial Services
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Financial Services

• SP Information Services
• Research, market news, stock selections for
  retail customers at

47
Financial Services

• SP Retirement Services
• Provides retirement investment advice
• Available to 4 million 401(k) participants

48
Financial Services
SP Ratings Direct

• Search more than 200,000 issues by region,
  sector, rating, issuer or financial instrument

49
The McGraw-Hill Companies

• Leveraging technology

• Create more value-added services
• Improve distribution
• Reach new customers
• Improve productivity
• Create better financial results

50
The McGraw-Hill Companies

• Investor Relations Contact
• Donald S. Rubin
• Senior Vice President, Investor Relations
• The McGraw-Hill Companies
• 1221 Avenue of the Americas
• New York, NY 10020
• Tel [phone]
• Fax [phone]
• E-mail investor_relations_at_mcgraw-hill.com
• URL www.mcgraw-hill.com/investor_relations