McGraw-Hill Realigns Financial Information Under Kenny's Quandt

After just two months in office, McGraw-Hill Inc. president Harold McGraw shook up the vendor's financial information services units. McGraw named James Quandt to head a newly realigned unit comprising the vendor's S&P Information Group and its J.J. Kenny Co. brokerage subsidiary. The two units were previously managed separately.

Displaced in the reorganization was S&P information services unit head Michael Hehir, who is now in charge of new ventures. Quandt assumes Hehir's former areas of oversight and retains his previous post as president of Kenny -- a position he's held since last year. Quandt takes the new title of president of financial information services group.

According to Hehir, the restructuring was enacted to "pull together our information businesses to pursue our common strategy." Hehir says he will continue to be involved with the S&P Information Group, but "the day-to-day management responsibilities are clearly Jim Quandt's."

Quandt's new turf includes Kenny as well as the flock of S&P information services. Those services include MMS International, DRI/McGraw-Hill, Platt's Commodities Information Services, S&P Securities Inc. and S&P Equity Services, which includes S&P MarketScope, ComStock and CompuStat.

As a result, Quandt now has 15 direct staff reports (see chart). A Kenny spokesperson says the vendor has no plans to alter the current organizational structure at Kenny in the wake of the recent changes. She also says that there are no immediate plans to bundle prices or integrate Kenny products with those of the S&P information group.

The management reshuffle follows close on the heels of the release of McGraw-Hill's third quarter earnings report, in which the financial information services group made a strong showing. Though the current reorganization for the first time unites the two units for administrative purposes, both units' revenues have for some time been reported under the single rubric of the financial information services group.

The group's revenue rose 13.6 percent over the same quarter last year, to $188 million. Both Platt's and Kenny did particularly well in the period, the company reported.

The highly profitable S&P Ratings group -- which also reports its earnings under the rubric of financial information services -- was not affected by the restructuring. S&P Ratings remains an independent unit, under the leadership of Leo O'Neill.

Meanwhile, Hehir has shifted his focus to product development, global expansion and development of strategic partnerships -- companywide. He says his mandate is to work with president Harold McGraw in "evolving a basic joint vision of how we'd like to see McGraw-Hill develop."

Under the aegis of new ventures, Hehir says he will also look at developing products and markets that don't fall under any of the vendor's existing business units. "In those instances, they could become wholly managed components of this organization that I'll be running," Hehir says.

According to Hehir, that's one of the reasons that the new ventures group doesn't carry "a heavy amount of administrative burden." One of the units the new group did incorporate is McGraw-Hill's technology planning team. Ed Herefniak, who heads that team, now reports directly to Hehir. Bringing that into the new venture group was "a natural," Hehir says, given that the team is "already working with a number of our units on new venture development."

Hehir and Quandt were both involved in McGraw's deal with Liberty. McGraw-Hill bought a 25 percent stake in Liberty Brokerage Inc. earlier this year (IMD, June 7). Hehir says he will remain on the Liberty board, but adds that "Liberty is more immediately involved with the operating unit Jim Quandt is managing."

Given the new management structure, Hehir says, "we'll probably shorten some of the communications lines there because Liberty had value to both Kenny and MMS," says Hehir.

In addition to the realigned Kenny/S&P unit and the S&P Ratings group, McGraw-Hill's financial information services segment also includes its Tower consulting subsidiary, and licensing and royalties for its S&P 500 and S&P 400 indexes. The segment accounted for more than 50 percent of McGraw- Hill's total revenue, sources say.