Scholastic strikes deal to buy Toronto’s 9 Story Media Group

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Daniel Tiger is getting a new neighbourhood.

The Canadian production company behind the Mister Rogers-inspired children’s television show – 9 Story Media Group – is being acquired by American publishing giant Scholastic Corp. SCHL-Q, the two companies announced Tuesday morning. Scholastic will pay US$186-million in cash for Toronto-based 9 Story, marking the largest acquisition the company has made since 2000 when it bought encyclopedia publisher Grolier for US$400-million.

In addition to Daniel Tiger’s Neighbourhood, 9 Story’s animation studio – Brown Bag Films – has produced other well-known children’s programming such as Arthur, Karma’s World and The Magic School Bus Rides Again. Brown Bag has won 21 Emmy Awards and has received two Oscar nominations for its content.

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Vince Commisso, 9 Story’s chief executive officer who co-founded the company in 2002, has been working with Scholastic content for three decades. In 1994, while working at animation studio Nelvana Ltd., Mr. Commisso produced the original Magic School Bus series.

“This was an opportunity for two entities that know each other really well and trust each other really well to combine,” he said in an interview. “It doesn’t change who we are.”

For Scholastic, buying 9 Story demonstrates the company’s increasing strategic focus on its entertainment division, which has existed since the 1980s but has only recently become a major part of the bookseller’s business. The division was relaunched in 2017 by Iole Lucchese, a Canadian who spent more than a decade working at the company’s Canadian division before taking on a senior executive role at its New York headquarters in 2016.

“Screen time has taken some of reading time, so it is really important for us to stay connected to those kids and where they are,” Ms. Lucchese said in an interview.

When Scholastic content appears on children’s screens, “book sales go up and stay up,” she said, “so it is really about driving kids to the reading experience.

“We will go to where the kids are and right now, way more than they were 33 years ago when I started at Scholastic, they are on screens.”

Ms. Lucchese is now Scholastic’s chief strategy officer and entertainment division president. In 2021, she became chair of its board of directors after inheriting controlling shares in the company following the death of long-time CEO Dick Robinson. His father, Maurice (Robbie) Robinson, originally founded the company in 1920.

Since the relaunch, the entertainment division has become a growing profit centre for Scholastic through the licensing of its most popular titles such as Clifford the Big Red Dog and Goosebumps for film and TV development. Buying 9 Story will allow Scholastic to bring more productions in-house.

9 Story also has a distribution business and a consumer products division, with facilities outside Toronto including Dublin, New York and Bali.

The company generated US$104-million in revenue during its most recent fiscal year, which ended on Aug. 31, and has 850 employees worldwide. Roughly 300 members of the 9 Story work force are based in Canada.

While Scholastic is acquiring 100 per cent of 9 Story, it is only acquiring a minority of its voting rights and two seats on its board of directors. Majority control will remain within Canada, the company said, in order to ensure 9 Story content will continue to qualify as Canadian.

An investor presentation released alongside the acquisition announcement said 9 Story will maintain an “ability to tap significant Canadian and Irish tax subsidies.”

“It seems unusual on the face of it, but everyone here at Scholastic respects that 9 Story is a Canadian company,” Ms. Lucchese said. “We trust Vince and his management team to continue to operate at the level they have been.”