Although book publishing was not high on the agenda at this year's PaineWebber Outlook for the Media Conference, the few book publishers who spoke were very optimistic about prospects for 1999.

Jack Witmer, president of the McGraw-Hill Cos.' educational and professional publishing group, said the outlook for the elhi segment "is better than ever," and he is looking for good growth in earnings and sales next year. He cited increased K-12 enrollments, strong funding and a robust adoption schedule as reasons for his optimism. Bob Evanson, executive v-p for the educational and professional publishing group, predicted that MHC's college division will grow faster than industry averages in 1999, with improved margins. He expects the company to grow in such disciplines as computer science, English and math. Evanson also noted that MHC's college operation is devoting more resources toward developing electronic products and that he expects to see growth in online education and distance learning.

Addressing the question of e-commerce, MHC CEO Terry McGraw said that while the company has not generated "lots of revenue" from selling over the Internet, it sees "lots of potential." McGraw stressed that before the volume of business increases over the Internet, an effective privacy policy needs to be developed, adding that MHC firmly backs the creation of such a policy. McGraw also observed that the spread of online bookstores "has given new life to our backlist."

The explosion in Internet use is also helping MHC expand its global sales. John Negroponte, executive v-p, global markets, said that global revenues are growing more rapidly than MHC's domestic revenues. The globalization of business has increased the demand for English-language titles and MHC is in a strong position to take advantage of this trend, Negroponte contended.

Donald Grenesko, senior v-p for finance and administration at Tribune Company, said that the company expects revenues in its educational division to increase between 12% and 15% in 1999 with cash flow up 13%-17%. He said that Tribune expects all of its educational businesses to post gains in 1999. To help the education group expand, 1999 will mark the first phase of building a new printing and distribution facility at its Landoll subsidiary.

Company chairman John Madigan said Tribune is on track to hit the $500 million sales mark by 2000 in its education group. Sales in 1997 were $226 million. Madigan told conference attendees that Tribune is in position to take advantage of opportunities in the lifelong learning market and has positioned itself to benefit from the growing use of technology in classrooms as well. International growth is also expected for 1999.

In his presentation, Viacom deputy chairman Philippe Daumann noted that with the sale of all but Simon &Schuster's consumer assets to Pearson, book publishing represents only about 5% of the company's revenues, compared to 19% before the divestiture. The sale reflected "Viacom's move towards higher-growth entertainment areas," Daumann said. He added, however, that S&S's consumer publishing group "fits nicely" with Viacom's other properties and that the company expects to "have a good time developing this asset and improving its operations."

A positive trend that cut across most companies' presentations was that manufacturing costs should be held in check in 1999, as paper and printing expenses are expected to be relatively flat in the coming year.

At an earlier analysts' presentation, executives for Harcourt Brace said they expect "very strong earnings growth" in 1999. The company reported a big gain in sales and earnings in fiscal 1998 (see story p. 11).

Brian Knez, president of HB parent company Harcourt General, attributed the bullish outlook in part to the fact that "education is `in'-big time." The company will look to take advantage of the opportunity in the education market by continuing to invest in new programs. HB president Jim Levy estimated that capital expenditures over the next few years will run about $220 million annually.

HB also sees growth coming from its STM group, where recent acquisitions in its medical unit will push total sales in the division to more than $700 million.