New York, NY (June 25, 2002) -- Scholastic Corporation (NASDAQ: SCHL), the global children's publishing and media company, today announced that it is taking several steps to strengthen its position in the important United Kingdom market.


STRATEGIC PARTNERSHIP


Scholastic has entered a broad-based strategic partnership with The Book People, the leading British book direct sellers with estimated 2002 revenues approaching £75 million, designed to expand book sales to the consumer market and increase Scholastic's presence in the U.K. The Book People sells books through multiple channels, including direct mail to 2 million customers and display fairs in a variety of venues, such as offices, factories, hospitals and schools. The company also sells and fulfills books for the Times of London, The Daily Mail and other newspapers.


The partnership between Scholastic and this fast-growing private company has several elements, including Scholastic's acquisition of an equity interest in The Book People and the companies' collaboration in a 50/50 joint venture in direct-to-home bookselling in the U.K. The companies will also explore together potential opportunities in the U.S. and around the world.


The U.K.venture will be run jointly with The Book People management to revitalize the highly regarded Red House brand and will market and distribute books for children and adults throughout the U.K under the "Red HouseÔ" and "School LinkÔ" names. Red House sells children's books through catalogs mailed to parents at home. School Link sells adult and children's books to families through schools. The Book People will provide Red House access to their 2 million customers, while Scholastic will provide School Link access to its customers in 25,000 schools. The joint venture is expected to generate revenues of approximately £8-10 million in its first year of operation.


Scholastic U.K. will continue to operate its school book fairs, school book clubs, trade, magazines and educational publishing businesses.


Scholastic is acquiring a 15% equity interest in The Book People for £12 million and will make available an interest-bearing revolving credit facility of up to £3 million to finance the continuing growth of The Book People, including the building of a new warehouse in Wales. Upon repayment of the credit facility, Scholastic may make an additional payment of £3 million contingent upon The Book People achieving certain operating targets. Scholastic has rights to further increase its equity ownership under certain circumstances. The equity interest and joint venture are steps in the ongoing growth of The Book People, which will continue to be directed by its Chairman, Mr. Ted Smart, and its Chief Executive, Ms. Seni Glaister.


With the formation of the joint venture, Scholastic expects to generate cost savings and other operational efficiencies in its U.K. business. The Company expects that the combined effect of The Book People transactions and the streamlining of its existing U.K. operations will be approximately neutral to Scholastic's earnings in fiscal 2003 and accretive in the future.


Mr. Richard Robinson, Chairman, CEO and President of Scholastic, stated, "The U.K. is a strategically important market for Scholastic, and we are taking a range of actions to strengthen our position in book publishing and distribution. While we continue to concentrate on publishing and selling books and educational materials for children and schools, the association with The Book People will enable us to expand in the children's market while adding capability in focused distribution of books for families."
Mr. Robinson continued, "We are very pleased to be joining forces with the seasoned Book People marketing team of Ted Smart and Seni Glaister, who have a proven track record of using inspired marketing and strong distribution and fulfillment to create a fast-growing, profitable business in the U.K. Our new joint venture pairs the marketing acumen and broad customer base of The Book People with our highly regarded Red House brand. We're confident that this collaboration will create a strong platform for future growth in the important U.K. consumer market, as well as advancing our mutual goal of making good books accessible at affordable prices to families and children."


Ted Smart, Chairman of The Book People, stated, "We are very excited to be working with Scholastic, the global leader in children's book publishing and distribution. Through this joint venture, we will use our direct mail expertise and strong customer base to increase the scope of the highly regarded Red House enterprise while continuing to grow the School Link business. Scholastic is the ideal strategic partner for The Book People and we're confident these agreements mark the beginning of an enduring, mutually beneficial relationship."


NEW U.K. MANAGING DIRECTOR


Scholastic has also named Mr. Ian Ronald as Managing Director of Scholastic U.K., effective August 12. Ronald, currently Chief Executive of the Wine Society, will succeed David Kewley.
Robinson added, "Ian Ronald is a proven builder of businesses, and we believe he is the right executive to lead our U.K. business in the next phase of its development. Over the past 11 years, David Kewley has done an excellent job of growing the U.K. business from £l0 million pounds to approaching £45 million pounds in total revenues and helping it to become one of the leading children's publishers and distributors. Under his leadership, the Company has consistently ranked in the top three in the trade children's book market. David built the Company's book fair business and established a strong presence in the schools with educational and professional publishing, as well as with outstanding teacher magazines. He is a distinguished publishing leader and a good friend. We thank him for his leadership of Scholastic in the U.K."

David Kewley said: "It has been enormously rewarding to develop Scholastic's four businesses in the U.K. and to help the Company grow to its current market-leading position. I know that under Ian Ronald's leadership, the staff of Scholastic U.K. will continue to be dedicated to growing the business and achieving the goals of helping children realize their potential in life through literacy, entertainment and education."


Ian Ronald, 36, has been Chief Executive since 1997 of the Wine Society, a rapidly growing direct mail and online wine retailer with 200 employees. Over the past five years, Ronald has increased revenues by 16% annually to a current level of approximately £45 million. From 1995 to 1997, he was a regional operations manager with Pizza Hut UK. Earlier in his career, he spent eight years at British Petroleum in a series of increasingly senior strategy, sales and operational roles. He received a BSc Honours degree in Physics from Durham University in 1987.


Mr. Ronald said, "I am thrilled to be joining the Scholastic team. Clearly, Scholastic is a great brand respected by teachers and parents and enjoyed by children. I believe that Scholastic has wonderful opportunities in the U.K. market and I look forward to growing this business profitably in the years to come."
Robinson concluded, "We have found an ideal partner in The Book People and the right executive in Ian Ronald to build on the foundation established by David Kewley to take our U.K. business to the next level."


About Scholastic
Scholastic is the world's largest publisher and distributor of children's books. As a global children's publishing and media company serving the needs of parents, teachers, and children, Scholastic provides book and software distribution through school book clubs, school book fairs and to classrooms, as well as through the retail trade. The company holds a leadership position in direct-to-home children's book clubs. Since 1920, Scholastic has created quality educational materials for schools and has expanded its reach to include the distribution of books, software, toys, online learning services and television programming direct to the home. Scholastic's Library Publishing division is the leading print and online publisher of children's reference materials. Internationally, Scholastic operates wholly owned companies in Argentina, Australia, Canada, Hong Kong, India, Indonesia, Ireland, Malaysia, Mexico, New Zealand, The Philippines, Singapore, Taiwan, Thailand and the United Kingdom. The U.S. Scholastic web site http://www.scholastic.com is a leading provider of educational services online for parents, teachers and children.

About The Book People
Ted Smart founded The Book People, the UK's largest direct seller of books, in l988. Through a network of independent contractors, the company sells books and book related product direct to the consumer. The Book People visits over 30,000 work places each week, including schools, hospitals and factories. In addition, The Book People serves its 2 million strong customer base with a monthly catalog. This mail order business can generate up to 20,000 telephone calls each day at peak ordering periods, all handled by the company's dedicated call centers in Warrington, Haydock and Bangor, North Wales. The Book People sells more than l4 million books each year. The Book People's website at www.thebookpeople.co.uk is designed to offer an even greater level of service to its existing customer base.


Forward Looking Statements
This press release contains certain forward-looking statements, which are subject to various risks and uncertainties. Actual results could differ materially from those currently anticipated.

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