Devoted to Managers and those that seek to improve their management skills

While Scholastic Corp. CEO Richard Robinson is in no danger of losing his job, there has been a lot of dissatisfaction with shareholders over what they perceive as mismanagement of the huge windfall the Harry Potter franchise has brought the company.

Some, such as Mark Boyar of Boyar Asset Management Inc., which holds shares in Scholastic, says the company should be sold because it offers the best chance at getting value for the shareholders. Many think if this doesn't happen, shareholders may leave the company in droves very soon.

Of course Boyar, who's company owns about 200,000 Scholastic shares, stands to gain richly if the company was sold. Obviously they bought into the company thinking Harry Potter would carry it far beyond where it has. That's the chance you take when you invest.

Robinson said in an interview, "We have no intention of selling the company, and we don't believe our investors need us to sell the company to realize value."

Shares for Scholastic have only been able to average 7.5 percent increase a year for the past 10 years, while the S&P Midcap Index as outperformed that in a big way, averaging a 13 percent average over the same time frame.
 
Most of the criticism leveled at Robinson has been the failure of creating new franchises within the company, with the extraordinary success of Harry Potter.
 
While that look like the case because of the popularity of the franchise, since 1998 until May of this year, the book series has brought in about $800 million. While that's not bad, it's not what may be expected when considering the popularity of the brand. It accounts for only 4.7 percent of all sales over the nine-year period for Scholastic.

We may see shareholders flee the company, but we won't be seeing Robinson going anywhere. Similar to the Bancrofts and Dow Jones (DJ), the Robinson family controls about 80 percent of the board through its Class A shares.
 
Part of this problem to me is related to some shareholders seeing too many stars with the Potter franchise, and expectations were higher than could be met. That's their fault for not looking at the company in a much more objective way, and investigating all its revenue streams and operations.

The publishing industry has for the most part always been cyclical, as big hits cause some excitement and surges, and then a downturn will come. When you consider the success of Harry Potter as a book series, what could possibly be there that could replace it? Nothing at this time could live up to it.

Will investors leave the company in a big way? I think so. But then again, I don't think they were ever investors, rather they were speculators that didn't get the big money they thought they were going to. Oh well, on to the next big thing.