Transaction Further Strengthens Scholastic's
360-Degree Content Creation Strategy and Position as a Leading
Children's Media Company
NEW
YORK and TORONTO,
June 21,
2024 /PRNewswire/ -- Scholastic (NASDAQ: SCHL),
the global children's publishing, education and media company,
today announced that it has closed its previously announced
definitive agreement to invest in 9 Story Media Group ("9 Story"),
a leading independent creator, producer and distributor of premium
children's content, after receiving a satisfactory opinion from the
Minister of Canadian Heritage with respect to the transaction, in
addition to satisfying customary closing conditions.
The transaction further enhances Scholastic's development,
production and licensing interests, expanding opportunities to
leverage its trusted brand and best-selling publishing and global
children's franchises to build deeper connections with young people
around the world across print, screen and merchandising. Scholastic
has acquired 100% of the economic interest and a minority of voting
rights in 9 Story for CAD $250
million (approximately USD $182
million) from an affiliate of private equity firm ZMC and
other selling shareholders.
9 Story Media Group will continue to be led by President and
Chief Executive Officer Vince
Commisso. Scholastic Entertainment ("SEI") will continue to
be led by Iole Lucchese, Scholastic
Board Chair and President, Scholastic Entertainment.
Peter Warwick, President and
Chief Executive Officer of Scholastic, said, "We are thrilled to
add 9 Story's industry-leading children's content production,
distribution and licensing capabilities, extensive content library,
and highly talented team to Scholastic's portfolio. Together, we
can leverage our combined scale to grow Scholastic's children's
franchises, drive book sales and create new opportunities to
introduce millions of children to our stories. I'm confident that
our shared mission and collective expertise will spark innovation
and creativity across the entire IP life cycle, supporting our
360-degree content creation strategy and our opportunity to meet
the strong demand for high-quality kids and family
entertainment."
Ms. Lucchese added, "Building upon the strong foundation we've
developed with the 9 Story team over the past 20 years, we're
excited to now participate in the full IP life cycle by combining
Scholastic's ability to create IP that kids love with 9 Story's
best-in-class ability to produce, distribute and license it. In
today's world, it's ever more important that we meet kids where
they are, and we look forward to expanding our work with our
colleagues to bring kids back to our iconic brands and
stories."
Mr. Commisso said, "We're thrilled to start this new chapter and
build on our long-standing relationship with Scholastic. Together
we will continue to deliver high-quality, engaging content for kids
and families, while significantly expanding our joint ability to
build franchises on a global scale."
Financial Details
Scholastic has initially funded the transaction from its
available cash and its revolving credit facility and anticipates
maintaining its regular dividend and its authorized stock
repurchase program.
The transaction is expected to contribute long-term earnings
accretion, reduce the capital intensity of production and drive
substantial improvements in top-line growth and bottom-line results
through 9 Story's existing content library, best-in-class
production studios, and global distribution and licensing
capabilities. Scholastic expects to provide further details
on 9 Story and Scholastic Entertainment's historical financial
results and outlook, when it reports its fiscal 2024 fourth quarter
results next month. Beginning in the current fiscal 2025 year,
Scholastic intends to consolidate both businesses' financial
results in a new reporting segment.
Advisors
CDX Advisors acted as exclusive financial advisors to
Scholastic. Baker & McKenzie LLP, Dentons Canada LLP and
Mason Hayes & Curran LLP served
as Scholastic's legal counsel in the transaction.
Barclays acted as exclusive financial advisor to 9 Story.
Sidley Austin LLP served as ZMC's legal counsel and Goodmans LLP
served as 9 Story's legal counsel.
About Scholastic
For more than 100 years, Scholastic Corporation (NASDAQ: SCHL)
has been encouraging the personal and intellectual growth of all
children, beginning with literacy. Having earned a reputation as a
trusted partner to educators and families, Scholastic is the
world's largest publisher and distributor of children's books, a
leading provider of literacy curriculum, professional services, and
classroom magazines, and a producer of educational and entertaining
children's media. The Company creates and distributes bestselling
books and e-books, print and technology-based learning programs for
pre-K to grade 12, and other products and services that support
children's learning and literacy, both in school and at home. With
international operations and exports in more than 135 countries,
Scholastic makes quality, affordable books available to all
children around the world through school-based book clubs and book
fairs, classroom libraries, school and public libraries, retail,
and online. Learn more at www.scholastic.com.
About Scholastic Entertainment
Scholastic Entertainment brings high-quality content across
multiple platforms to audiences of all ages. Among its
award-winning productions are the animated series "Clifford the Big
Red Dog®" for Amazon Prime and PBS Kids, a live-action "Clifford
the Big Red Dog®" feature for Paramount, and Peabody and Daytime
Emmy® Award-winning "Stillwater®," an animated series for Apple
TV+. Scholastic Entertainment continues to build celebrated brands
worldwide by bringing both nostalgic Scholastic properties and
exciting new voices to the screen. Some of its recent projects
include "Eva the Owlet™," an animated series for Apple TV+ based on
the New York Times bestselling
Scholastic book series OwlDiaries™, the hit live-action
"Goosebumps®" series, which was recently picked up for a second
season, with Disney+ and Hulu, and a live-action feature adaptation
of "The Magic School Bus" in development with Elizabeth Banks and Marc
Platt. Scholastic Entertainment is the media division of
Scholastic Corporation (NASDAQ: SCHL).
About 9 Story Media Group
9 Story Media Group is a leading creator, producer and
distributor of premium, kids and family-focused content. Its
award-winning animation studio, Brown Bag Films, is recognized
around the world for best-in-class brands such as "Doc
McStuffins®," "Daniel
Tiger's Neighborhood," "Octonauts®," "Wild
Kratts®," and "The Magic School Bus Rides Again." The company's
international distribution arm, 9 Story Distribution
International based in Dublin, represents more than 5,000
half-hours of animated and live-action programming, seen on some of
the most respected international channels and platforms. Its
in-house consumer products division, 9 Story Brands, builds
international entertainment brands for kids, with expertise across
creative, brand marketing, and licensing. 9 Story's Creative
Affairs Group creates, develops, and produces award-winning
branded properties using groundbreaking formative research. With
facilities in Toronto, Dublin, New York,
and Bali, 9 Story Media Group employs approximately
850 creative and corporate staff worldwide.
About ZMC
ZMC is a leading private equity firm comprised of experienced
investors and executives who invest in and manage a diverse group
of media, entertainment, communications and technology
enterprises.
Founded in 2001, ZMC's investment philosophy centers on
operational value creation driven by targeted investment themes,
deep sector expertise, and strong partnerships with industry and
operating executives. ZMC approaches its investments in
collaboration with management teams and has a successful track
record of actively adding value to portfolio companies. For more
information, visit www.zmclp.com.
SCHL: Financial
Forward Looking Statements
Certain statements contained in this press release may
constitute "forward-looking statements" within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995. Often, but
not always, forward-looking statements can be identified by the use
of words such as "plans", "expects", "is expected", "budget",
"potential", "scheduled", "estimates", "forecasts", "intends",
"anticipates", "believes", or "projects", or the negatives thereof
or variations of such words and phrases or statements that certain
actions, events or results "will", "should", "may", "could",
"would", "might" or "will be taken", "occur" or "be achieved" or
the negative of these terms or comparable terminology. All
statements other than statements of historical fact, including
those that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions or future events or
performance, including any synergies expected to be achieved by
Scholastic from its investment in 9 Story Media Group, are not
historical facts and constitute forward-looking statements
involving estimates, assumptions and uncertainties that could cause
actual results or outcomes to differ materially from those
expressed in such forward-looking statements. Such statements
reflect Scholastic's current views and intentions in respect to
future events, arrived at based on current information available to
Scholastic, and are subject to risks, uncertainties and assumptions
as referred to above. Many factors could cause the actual results,
performance or achievements that may be expressed or implied by
such forward-looking statements to vary from those referred to
herein should one or more of these risks or uncertainties
materialize, including those risk factors discussed or referred to
in Scholastic's disclosure documents filed with the U.S. Securities
and Exchange Commission (the "SEC") available on the SEC's website
at www.sec.gov, including Scholastic's most recent Annual Report on
Form 10-K and quarterly report on Form 10-Q.
SCHL: Financial
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SOURCE Scholastic Corporation