McGraw-Hill Companies' (NYSE: MHP) BusinessWeek, suffering under the same surfeit of advertising bedeviling the rest of the magazine industry, is going in for an extreme makeover, according to Leon Lazaroff of Bloomberg. Look for more feature articles and less lifestyle coverage. Cosmetic changes will include typography, logo and graphics. Weight is not an issue, as it's already Kate Moss-thin.

The move comes in response to a 20% decline in ad sales in the first half of 2007, compared to the same duration in 2006. In contrast, the affiliated web site, BusinessWeek.com, continues to expand its ad revenue. The magazine slots in MHP's information & Media sector, which brought in $223.1 million in revenue in the second quarter of this year, with $14.7 million in operating profit for a margin of 5.9%.

McGraw-Hill will announce its third-quarter earnings next Thursday, which would be an excellent time for it to roll out the vamped-up version of BusinessWeek.

Textbooks prices are sky high. New editions come out seemingly every year, making the previous edition obsolete. So-called textbook customization destroys the used textbook market and students are refusing to purchase all the required course material. If McGraw Hill Companies Inc. (NYSE: MHP) were still just publishing textbooks, it would be in big trouble. But McGraw Hill is moving away from its reliance on textbooks, and into financial information and services where costs are lower and profit margins higher. The stock looks increasingly attractive. Its P/E multiple is just above the industry average while its EPS is 50% above industry average. Don't judge this book only by its cover. The stock began the year trading at $67.09, and closed June 11 at $70.02, up $0.57.

McGraw Hill Companies reported quite respectable 1Q 2007 earnings on April 24. Overall, revenue for the quarter was up 13.7% to $1.3 billion, while net income for the quarter was $143.8 million and diluted EPS doubled to $0.40. Results, however, were not unifrom across the companies' three major business units. Textbook segment revenue increased 5.6% to $331.7 million. That's a lot of accounting textbooks. Nevertheless, this segment continued to operate at a loss of $90.7 million. K-12 education revenue declined 1.2% despite encouraging big book order potential from Texas, California, Tennessee and Indiana. College textbook revenues were up 11.5% to $187 million, helped by large textbook orders for the second semester.