UPDATE 3-McGraw-Hill quarterly earnings fall 14 percent

* Q3 EPS $1.07; Street view $1.05

* Revenue falls 8.4 pct

* S&P revenue rises

* Shares fall more than 1 percent (Adds details on education market, Standard & Poor's, byline)

By Elinor Comlay

NEW YORK, Oct 26 (Reuters) - McGraw-Hill Cos Inc (MHP.N) reported a 14 percent decline in third-quarter earnings and lowered its revenue outlook for the year, even as its Standard & Poor's ratings unit reported its first quarterly increase in revenue in almost two years.

A drop-off in print and television advertising hurt the company's media business, while its education arm suffered as schools cut back spending on new textbooks.

Chief Executive Harold "Terry" McGraw said he now expects revenue for 2009 to fall about 7 percent -- worse than the company's previous forecast of a 5.5 percent to 6.5 percent decline.

Full-year results will be helped by cutting costs, he said, noting he expects profit for the year to be at the top of the company's $2.20 to $2.25-a-share guidance.

Net income applicable to common shareholders fell to $336.1 million, or $1.07 per share, from $390.2, or $1.23 per share, a year earlier.

The earnings beat the analysts' average forecast of $1.05 per share, according to Thomson Reuters I/B/E/S, but the New York-based company's stock fell 1.7 percent, or 52 cents, to $29.98 in late-morning trading.

Revenue fell 8.4 percent to $1.88 billion, lagging a forecast of $1.94 billion.

In the education division, the picture was not entirely bleak. While elementary schools placed fewer orders, driving a 19.6 percent slump in McGraw-Hill's school education group revenue, revenue at its higher education, professional and international group fell just 1.8 percent, helped by a jump in college and university enrollments. The company expects the U.S. college and university market could grow 8 percent to 10 percent this year, according to the earnings release.

STANDARD & POOR'S

Standard & Poor's posted its first quarterly revenue increase since the third quarter of 2007 as companies began issuing more debt.

Ratings agencies like S&P and its main rival Moody's Investors Service, owned by Moody's Corp (MCO.N), have come under fire for fueling the financial crisis by assigning high ratings to toxic mortgage-backed securities that later defaulted.

S&P is facing a barrage of investor lawsuits and potential regulatory changes, as the U.S. government is expected to pass legislation on the ratings agencies as part of its wider financial reform package.

"The drafting process is under way and the situation is still fluid," McGraw said on a call with analysts, noting the company was in discussions with regulators in the United States and abroad.

Earlier this month, the company agreed to sell BusinessWeek magazine to Bloomberg LP. The $5 million deal should close in the fourth quarter, the company said.

McGraw-Hill shares are up 31 percent since the start of the year. (Reporting by Christian Plumb and Elinor Comlay; Editing by John Wallace and Maureen Bavdek)