Houghton Mifflin stock sinks. Termination of Channel One News next?

November 3, 2016
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Investors in Channel One’s parent company, Houghton Mifflin Harcourt, are suffering from a substantial drop in share value.

 

Houghton Mifflin Harcourt Announces Third Quarter 2016 Results

Why Shares of Houghton Mifflin Harcourt Co. Plunged Today / The company came up far short of expectations and drastically cut its full-year guidance.

 

From Jim Metrock:  Things are bad at Houghton Mifflin Harcourt.  Today the company lost 22% of its stock value and that is after several months of stock price deterioration.

Interim CEO Gordon Crovitz has his work cut out for him as he tries to undo the damage caused by the decisions of former CEO Linda Zecher.  According to Mr. Crovitz’s comments during today’s investor conference call,  the company’s “new” California English Language Arts product was poorly planned and marketed.  Instead of creating a brand new product, Crovitz said, the company decided to go against tradition and simply added value to an already established Language Arts product.  The market negative perception was Houghton Mifflin’s offering was not “new” but old.  Crovitz also blames the marketing of the product for being inadequate.

Ms. Zecher obviously lost her job mainly due to the California problem, but she is also the person who thought acquiring Channel One News, the pariah of the education world, was a good thing.  That has proved to be another one of Ms. Zecher’s poor decisions.

Channel One wasn’t mentioned in today’s conference call.  Channel One wasn’t mentioned in today’s “3rd Quarter Results” press release.  Channel One is never mentioned in Houghton Mifflin financial press releases.  That means that Channel One is not contributing (or contributing very little) to Houghton Mifflin’s revenue stream.  This is not surprising since schools across the country continue to pull the plug on the advertising program. [The primary purpose of Channel One News is and has always been to bring advertising to a captive audience of schoolchildren.]

Sooner or later Houghton Mifflin will reevaluate each company it owns to determine which ones contribute to its success and which ones don’t.  The company may wait until it hires a new permanent CEO to dump Channel One or it might do it earlier.

One thing is for sure: Houghton Mifflin Harcourt does not enhance its reputation with parents by owning the controversial, kiddie marketing firm Channel One.

 

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