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Scholastic reorganizes

Scholastic, Inc. is taking a back-to-basics approach as it shuffles through a company-wide reorganization aimed at making the company more cost-efficient and profitable while not diluting its product....
July 1, 1997

Scholastic, Inc. is taking a back-to-basics approach as it shuffles through a company-wide reorganization aimed at making the company more cost-efficient and profitable while not diluting its product.

Scholastic is focusing its attention on its four core businesses children’s books, instructional publishing, media and technology, and international as it continues to mature as a leading creator of educational and entertainment properties.

The company has eliminated about 400 positions, or about seven percent of its workforce, and expects to cut costs by at least US$25 million. Many of these positions are seasonal or overseas jobs. The magazines Agenda, Superscience Red and Math Power are being discontinued. The company has also retained the services of an investment banking firm to look into the potential sale of Home Office Computing and Small Business Computing, profitable magazines that do not fit into Scholastic’s redefined strategy.

Over the last year, Scholastic has experienced lower than expected revenues as well as the loss of many of the licensing rights for Goosebumps. Earlier in 1997, Parachute Properties, the creators of Goosebumps, assumed control of key licensing and merchandising rights held by Scholastic. Scholastic retains control of such areas as the TV series, CD-ROMs and on-line services.

Such setbacks are not expected to deter the company from moving forward on a slate of ambitious new publishing and television ventures. The company optimistically points to the growing popularity of its book series Animorphs as the type of property that will guarantee Scholastic’s long-term growth. Animorphs has surpassed Goosebumps on best-seller lists and will debut as a TV series on Nickelodeon in 1998. ‘It’s following much of the same trajectory that Goosebumps did at a similar time in its growth,’ says Deborah Forte, executive vice president of Scholastic Productions.

Dear America, a series of fictional historical books featuring a female teen heroine, has also shown strong retail sales. Discussions regarding a Dear America TV presence have been ongoing.

These literature-based properties are representative of Scholastic’s strategy to develop homegrown children’s franchises that work in a variety of media formats, while not compromising the original source material.

Scholastic believes its reorganization will allow it to stay focused on its mission to promote reading and literacy, but in a leaner, more efficient and more profitable manner.

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