Putting its costs on a leash, which was the focus of McGraw-Hill Cos. (MHP) in 2008, will still remain the top-priority for the company this year.

The New York-based publisher of textbooks and financial-information provider announced an 18 percent drop in profits for the fourth-quarter, resulting from a turbulent economy. With school districts spending less, the demand for textbooks crashed; and with chaos marking the financial markets, the demand for credit ratings from its Standard & Poor's division declined.

The biggest segment of McGraw-Hill, namely, its education segment reported an increased operating loss of $14.3 million, as against the previous year loss of $800,000. The rise in losses was an upshot of 8 percent less sales, accompanied by restructuring charges for the earlier-announced 215 layoffs. Moreover, budgetary pressures have been taking their toll on the school districts.

On the other hand, McGraw-Hill's financial-services business - including its Standard & Poor's Ratings Services - reported a 19 percent fall in earnings, and a 15 percent drop in revenue. Hit by the credit crunch, the S&P unit has seen limited issuance of new debt. As such, its revenue in credit market services dropped 25%.

Harold McGraw III, CEO McGraw-Hill forecasts that 2009 would be a challenging year for reasons more than one - the tight credit markets, a weak advertising market, and budgetary pressures on state and local governments.