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The Financial Ripple Effect of Common Standards

We've talked before about the effect that common standards and assessments could have on the publishing industry (see a blog post here and a story here). Today we have one more peek into those possibilities.

In a conference call yesterday to discuss first-quarter earnings for this year, McGraw-Hill executives discussed the impact of states' ordering decisions. To be sure, the tough economy had a lot to do with decisions to downsize or delay. (Company execs also talked about large orders they received from several states.) But common-core considerations are in the mix, in ways that are both potentially disappointing and potentially profitable for the publishing company, and you can see them in here.

The call shows an echo of the dynamic we reported earlier this year, which saw states delaying updates to their own standards because the common standards were coming down the pike. Here, McGraw-Hill execs discuss Indiana's advice to districts to delay purchasing instructional materials until they can get materials aligned with the common standards. (See Page 2 of the transcript of the conference call.)

In the longer run, the McGraw-Hill executives said they see "favorable implications" for them in the common-standards movement because states will adopt materials that incorporate the new standards and because of cost savings in not having to customize content from one state to another.

There are some interesting bits in the call, too, about the opportunities the publisher sees in the summative and formative testing markets as the Race to the Top assessment competition gets under way. Formative testing has been an area of particular interest among educators and federal education officials, as they seek better ways to gauge student learning as it happens, so instruction can be adjusted. Toward the end of the conference call, Terry McGraw, the company's chairman, president, and CEO, said the company is "shifting our focus here very heavily to the formative testing opportunities."

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