24. The Hearst Corporation
Revenues 2020: $ 11.400 billion (€ 10.180 billion)
The oldest media company in the world, the Hearst Corp. is based in New York City. The traditional newspaper and magazine segment constitutes the core business of the company. The company of today however relies on the integration of Internet services at an increasing rate. The manifold utilisation of content, such as the provision of special interest publications, are the company's two major strategic footholds. Other important activity fields of the US-company are the television and radio sectors, both in terms of production and distribution.
300 West, 57th Street, N.Y. 10019, USA
Branches: Newspapers, Magazines, Books, Internet Services, TV and Radio Stations, TV Production
Legal Form: Private Company
Financial Year: 01/01 - 12/31
Founding Year: 1884
- Steven R. Swartz, President & CEO
- James M. Asher, SVP, Chief Legal & Development Officer
- William Hearst III, Chairman of the Board
- Frank A. Bennack, Jr., Executive Vice Chairman
- Mark E. Aldam, President, Hearst Newspapers
- Lincoln Millstein, Senior Vice President & Special Assistant to the CEO
- Eve Burton, Senior Vice President & General Counsel
- David Carey, President, Hearst Magazines
- Neeraj Khemlani, Co-President, Hearst Entertainment & Syndication, President, Hearst Digital Studios
- Richard P. Malloch, President, Hearst Business Media
- Mitchell Scherzer, Senior Vice President & Chief Financial Officer
- Jordan Wortlieb, President,Hearst Television Inc.
- Philip R. Wiser, Chief Technology Officer
The media empire was founded by George Hearst. The 30-year-old son of a farmer set forth to travel from Missouri to California in 1850, where he discovered the richest gold and silver mines in America and became one of the most affluence men in the USA. In 1880, Hearst bought the 'San Francisco Examiner' daily newspaper in order to support his political career with the public organ. He became a senator in Washington in 1886. He did not care much for the losses generated by the newspaper, yet considered it useful just in case he would ever need a public medium of address. His son, William Randolph (1863-1951), who was eternalised by Orson Welles in the film 'Citizen Kane' in 1941, transformed the company into a media company, including shares of other business fields. Before taking over his father's newspaper in summer 1887, Hearst Jr. roamed around the offices of the famous east-coast newspapers. Despite adamant rumours, he never worked as a journalist for Joseph Pulitzer's 'New York World'. Starting with the 'Examiner', Hearst Jr. developed the largest media empire in the world. Following the acquisition of several newspapers, he invested into the film business and build his own studio in 1918, during one of the worst newspaper crisis in the history of the United States. When Charlie Chaplin's 'United Artists' refused a partnership, he found a congenial partner for his production company 'Cosmopolitan Productions' in the person of the Hungarian Adolph Zukor . The name Hears and the cult figure of Kane have both been synonymous for the archetype of the aggressive, power-hungry media tycoon.
Hearst boosted the circulation of his paper with free copies and the largest, most ominous headlines in all of the west coast. Apart from Pulitzer, Hearst is considered the inventor of so-called 'Yellow Journalism', the success of which was based on making news headlines larger than life as well as emotionalising and scandalising the content. Hearst's letter exchange with the painter Frederic Remington has become the stuff of legends. Hearst sent the artist to Cuba in 1989 in order to illustrate the expected outbreak of the war between Spain and the USA. Upon arrival in Havana however, Remington found everything to be dead calm and send the following telegram: “All is quite. There is no war. I want to come home.” Hearst responded: “Please stay. You provide the pictures. I'll take care of the war”. A little while later, a US Marine war ship exploded. Remington provided the pictures and Hearst enjoyed immense newspaper success. Hearst had no reservations when it came to using his newspaper for his own political ambitions. He reigned over his media kingdom like a baroque monarch from Castle San Simeon, a gigantic country estate at the west coast, where he resided with his lover. He was a passionate collector of art and antiquities. Castle San Simeon is open to the public today and the collection is open to visitors. The private man is definitely one of the severest money wasters in the history of modern industry. Today, the Hearst Corp. includes 15 daily newspapers. The two largest are published in San Francisco and in Houston, sporting circulations of more than half a million copies. Furthermore, the Hearst Corp. operates its own news agency (Hearst News Service), magazines such as 'Harper's Bazaar' or 'Cosmopolitan' as well as film studios, picture agencies, publishers, TV channels and production companies. Unlike the company itself, which has been headed by managers outside of the family, the 'Examiner' has always been a matter of the Hearst-clan itself. However, the antitrust division forced the family to sell the traditional newspaper. According to the cartel office, the Hearst corp. took over a monopoly in the region when it acquired the competitor newspaper 'San Francisco Chronicle'. Hence, a merger between the two large newspaper became impossible and both papers were hit with full force by the US-newspaper crisis and almost ended up going bankrupt. Nowadays, the 'Examiner' is a freemium newspaper and not related to the core company any more. The 'Chronicle' on the other hand amasses losses of approximately 50 million USD per year and would have been cancelled a long while ago, but the Hearst clan vouches for it with its fortune. The print edition is still subject to potential closure and it can be assumed that one of the major cities in the USA will eventually end up with no daily newspaper at all. The citizens are beginning to organise. Hearst becomes the target of privately organised private equities, hiring fired journalists. The fact that there have been talks between the initiative and the NY Times, which incidentally plans a San Francisco issue, hints towards a potential new development on the American regional journalism market – one of Hearst's key battlegrounds.
Fifty years ago, print products contributed 77 percent towards the revenue. In this day and age, it is only a meagre 15 percent. Reading the company's annual report, it becomes apparent that Hearst still considers itself a media company with focus on print media. The collapse of both the US automotive industry and real estate market (plus the associated financing businesses – also part of Hearst's conglomerate) reminded the management of the importance of the core business. It took a painful lesson for Hearst to learn that investments in this very field must be deliberated with great care. In August 2006, Hearst bought eight newspapers from the competitor MediaNews. Apart from the traditional 'Connecticut Post' newspaper, the package included „The Darien News-Review“, „The Greenwich Citizen“, „Fairfield Citizen-News“, “New Canaan News-Review“, „New Milford Spectrum“, „Norwalk Citizen News“ and „Westport News“ Furthermore, the MediaNews newspapers “The Stamford Advocate”, “Greenwich Time” and “The News-Times of Danbury” fell under Hearst's control. Initially, nothing became known about the buying price or consequences for the newspapers' staff. Yet, despite the fresh infusion of finance by Hearst, the MediaNews Group faced its demise in December 2008. As the major shareholder, Hearst had to be good for most of the credits. Traditionally, the media house would continue to finance newspapers in peril through other projects until the renovation process finished again. MediaNews bankrupted and served up a loss of 155 million UDS to Hearst. The deal was probably the cause of Victor F. Ganzi's (Chairman of the board) departure in 2008 and the legendary Frank A. Bennack, who led the company from 1979 to 2002, had to return from his retirement.
Initially, Ganzi was supposed to make sure that the difficult transition to the digital age would commence without further ado. Bennack was considered too old for this task. In the 1980s, the Hearst Corp. acquired three TV stations and bought 20 percent of the sports network ESPN in 1991. Magazine publishers such as Esquire and Redbook have been part of the company portfolio since the mid-1980s, plus several economy and business services. Furthermore, the company held on to a handful of agricultural businesses and forestries in California and Canada. By merging the TV division with Argyle Television, Hearst controls 26 local TV stations in the USA. In Autumn 2009, Hearst took advantage of the crisis, bought all freely available shares of Argyle and took the company share off the stock index for good. Hearst made an offer to the shareholders back in summer 2007, for about 23 USD per share. The shareholders refused the offer, as they deemed it to be too low. Two years later, Hearst bought the shares for 4,50 a piece. Since the last great acquisitions in the TV business, the business behaviour of Hearst seems to radiate with a certain perplexity. No division is spared by the crisis and wherever (or by whomever) the future of the media market is being decided upon – be it Apple, Google, Microsoft or maybe the publishers still – is one hard to thing to foresee. Hearst has become a company of involvements and an omnipresent cooperation partner. It holds countless minority share-holds of start-up companies and technology companies that work on and for the future of Internet publishing. Some succeed, other just vanish in the haze just as fast as they were founded in the first place. One success was the involvement in the E-Inc company, entered by Hearst thirteen years ago. E-Inc manufacturers the displays for almost all established e-readers. The sale of this involvement in Autumn 2009 lighten up the otherwise grim annual report ever so slightly.
The firm belief in the future of print media is retained by Hearst, despite (or because of) the diverse Internet activities. The multichannel utilisation, by which William Randolph Hearst's fortune has been nourished all times, is still a pivotal part of the company strategy. Hence, the archive content of the world's oldest media company is turned into profit in the form of licenses for video games for example. Hearst owns its own company in the relevant field with UGO entertainment. The company strategy has always been to maintain a preferably smooth and unified style across all forms of media. When Hearst took over the former cult magazine 'Electronic Gaming Monthly' form Ziff Davis, one of the comments read as follows: This is more than just a change of ownership. Soon, the David style would be a thing of the past, the editors and publishes will be replaces by others and the 20-year long history of Electronic Monthly come to an end.
The construction of the new 500 million USD headquarters began in 2003, a glass addition to the existing six-story building located at the Manhattan Columbus Circle. The 46-floor building by the London architect Norman Foster has been the home of all 2000 Hearst employees since summer 2007, all of whom had previously been scattered across five buildings. The fact that Hearst is in no need of financing such sums through credits is another testimonial to the company's financial prowess. New formats such as the Huffington Post are therefore observed with only the slightest of suspicion. The revenue that is generated by Lady Huffington and her service is met with bemused smirks on the side of the Hearst managers.
Randolph Hearst, the last of five sons of the newspaper baron, vacated his position in 1996 at the age of 80 and made room for his 68-year old nephew George Hearst. Ever since the death of William Randolph Hearst, no individual personnel decision was more important than the change from Bennack to Ganzi. Of course, the company had to come up with answer as to why the change back from Ganzi to Bannack had been just as necessary last year.
Victor F. Ganzi (* 1947), a former tax lawyer, became the 'President and CEO' in 2002. He had known the company since 1970, as Hearst was a client of the Rogers, Wells and Ganzi (today Clifford Chance) solicitor’s office. Ganzi became an advisor of the former client in 1990, Chief Financial and Legal Officer in 1992 and CEO of the Hearst Corp. in 1998. In the last five years, he has been the partner of his successor Frank A. Bennack Jr., who left a distinct mark on the company during his 24-year stint as top manager. 85 percent of the company's present activities were subject to Bennack's supervision. Ganzi, Bennack's deputy for 12 years, has first and foremost promoted the television business and other expansions in print, radio and TV. Bennack remains the deputy chairman of the board and of thirteen trustees who in turn appoint the board of directors. Observers note that the basis for a trustworthy collaboration between Ganzi and the family has ceased to exist. Nothing further became known regarding the reasons for this peculiar development – business as usual for Hearst.
One branch of the Hearst family rose to the top of the company and to the board of directors in the person of George Hearst, whose voice had not carried considerable weight prior to this development. The appointment of the nephew, who has experience in real estate but not the media business, can be compared to a family putsch, at least according to insiders, initiated by Bennack himself. Due to the fact that the company founder once constituted that the company shall be led by eight non-family professionals, the clan keeps trying to gain an insight into the financial situation. Hence, family outsiders hold the majority of the trust's thirteen seats. Ganzi had to deal with 61 direct descendants of the company founder. Furthermore, ten grand children of William Randolph Hearst receive pensions of unknown amounts by the company's unpublished profit pool. The fact that Bennack succeeded in balancing all these interests in 1979 becomes even more crucial in the light of Ganzi's departure and the question arises, who apart from Bennack (* 1933) could ever live up to the task. Bennack managed to embody the company founder himself. The question posed by the New York Times, how much the old Hearst would like the tower was answered by him instead of Ganzi, as if he disposes of a direct line to the grand old tycoon: “He would have loved it!".
Magazines and Newspapers
The company owns eight weekly newspapers and 15 daily newspapers, including the „Houston Chronicle“, „San Francisco Chronicle“, „San Antonio Express-News“, „Albany Times Union“ or „Seattle Post-Intelligencer“ (the latter is an online-only publication). Hearst relies heavily on his newspapers' online strategies and success is hardly ever measured by the number of sold copies. Instead, the company leadership deems it more important to hit the target audience mark, which has multiplied due to the Internet. This strategy applies to the magazine division too. In total, the magazines are read by 74 million US readers from the target audience of the over-18 year olds. Sporting a circulation of 2,6 million copies, the women's magazine 'Cosmopolitan' has been the most successful magazine of all 18 Hearst titles in the USA for years. Other titles are „Esquire" (1,8 Mio copies), „Good Housekeeping" (5,1 Mio.), „Harper's Bazaar", „Marie Claire" and „Town & Country" (each approx. 500.000).
The monthly total of Hearst titles is 20 million copies. Furthermore, more than 100 licensed issues and in-house foreign issues are marketed worldwide. The 'Cosmopolitan' is published in 53 countries and 19 Hearst magazines are published in England alone.
The Hearst Corp. had a good hand when it came to regional coverage from the very beginning and the new online models are also based on the publication of regional content. Apart from regional content, it's first and foremost the special interest offers that contribut the major share towards the company's revenue. Many print and online services provide for specific regions, interests or personal preferences. Hearst also emphasis diversification and has an eye on ethnic groups. The company especially flirts the Spanish-speaking US-Americans, who constitute the primary citizenry in many parts of the USA. The company attempts to win over these groups with Spanish titles and Spanish supplements in English newspapers.
Together with Oprah Winfrey, the most famous talk show host in the USA ('The Oprah Winfrey Show), Hearst launched the 'O' women's magazine in 2001 in the USA. The magazine turned out to be the company's most successful start-up and even hit a higher mark than 'Vogue' with 2,7 million sold copies. However, this success cannot be repeated indiscriminately: In 2003, the 'Lifetime Magazine' was first released. A magazine for the viewers of the Lifetime-cable channel created according to the same principle as 'O'. However, the magazine did not meet expectations and was cancelled only a year later. This might have been due to the fact that the 'Lifetime Magazine' had not been on television for some time as the result of a quarrel with the satellite provider EchoStar (Dish Network in the Mediadatabse). The company identifies the development potential of its magazines in newspapers first and foremost on the Internet. The cooperation with Internet pioneer Brightcove ensures the possibility to increase the quality of online version of newspapers with video productions.
Television and Radio
Hearst Television in Baltimore, Milwaukee and Pittsburgh encompass a combined total of 26 TV stations as well as seven radio stations. From 1997 to 2009, the division operated under the name of Hearst-Argyle Television Inc. and was the only company branch that was listed on the stock market. In 2009, the company bought all the remaining shares, took the company off the stock market and renamed it to Hearst Television. In total, the Hearst Corp. and its stations reach fifty million households via standard television services. Over the course of the last few years, the company attempted to extend the reach of its Internet TV through several acquisitions with success: While the advertising revenue in traditional television decreased by three percent, the Internet's takings swelled by 48 percent. Just like NBC, Hearst is involved in SlingMedia. Using the SlingBox, each and every program that arrives in the living room can be redirected to any screen in the world. Contracts with cable and satellite clients can therefore be extended into the mobile segment without further ado.
As far as cable television is concerned, Hearst Corp. is part of a joint venture with Disney and involved in the Arts & Entertainment (A&E) network with 75 percent (NBC holds 25 percent). A&E includes successful cable stations such as Arts & Entertainment or The History Channel, which is watched in 75 countries by now. Hearst and Disney are also involved in the Lifetime Television, the Brazilian Pay TV channel TVA and the worldwide most successful sports cable stations ESPN and ESPN2.
The company made good use multichannel marketing of content and the success of strong labels, when the Spanish-language 'Cosmopolitan Television' launched in 2002. The target audience are the 5 million viewers in Latin America. Hearst is also part of a 50:50 partnership with PRAMER SCA (Buenos Aires), a subsidiary of Liberty Media.
Hearst made early investments in online activities and unlike many other companies, held on to its strategies even after the stock market crash early in the new millennium. The core philosophy had been and still is that TV stations, book and records stores are physical obstacles on the way to the consumer, which are nullified by the Internet. According to the company, newspapers are first and foremost gateways to regional markets and an integral part of a more or less hermetic society. Just like the WAZ group in Germany, the company gradually combined its regional papers to a large online community, which even includes newspapers by other companies. The „San Francisco Chronicle“ and the „Houston Chronicle“ are both part of the consortium of 200 US newspapers, which have agreed to a strategic partnership with Yahoo!, by means of which the companies and papers are attempting to meet the competitor Google with adequate force on the heavily contested ad market. Other strategic partnerships exist with the likes of Microsoft too. Confidence levels are steady due to the fact that cities like Houston, which used to be home to 750.000 readers of the Chronicle, are now catered for by the combined websites of all Hearst products, reaching a total of 90 percent of the citizenship.
By now, the loose ends of all online activities are tied up at Hearst Digital Media, In February 2008, Hearst and the mobile phone provider Nokia agreed on a cooperation. Hearst joined the Nokia Media Network, which has a reach of more than 100 million mobile service end-users. For the same reason, Hearst got involved in Kaango. Not unlike eBay's Kijiji, website operators can include adverts on their website by using Kangoo and benefit from the clicks. Furthermore, Hearst entered into strategic online partnerships with 11 publishing houses, including the New York Times. Hearst has high hopes in the Skiff project, which is financed by Hearst and other publishers. Skiff is scheduled to release an e-Reader this year.
The pages of the local radio stations register 1,2 billion visitors each year. Once again, the regional focus of the business models turned out to be a golden goose. When the 'Katrina' hurricane partially destroyed New Orleans, the citizens could find the most reliable news on the Hearst websites WDSU in New Orleans and WAPT in Jackson. Refugees relied on the news from the regional station, which in turn inspired other stations to take on the news items. Ever since, the company's weather channel has enjoyed a rise to fame, operated by Hearst and NBC. NBCWeatherplus.com is a combination of local weather stations.
Production and distribution
Several production companies cater for in-house and other stations. Hearst's production companies provide for the Discovery Channel with documentary films (among others). As a producer of animated content, reality shows and TV films, the Hearst Corp. cooperates with the ZDF (among others). Hearst disposes of two distribution companies, which take care of getting the productions out into the world and onto the television screens. Lakeshore Entertainment takes care of the international market while Tribune Entertainment is responsible for the USA.
The company sourced its experiences in all things IT and created a core business model based on IT. It does not go astray of the company philosophy at all, a company that even operates a Health-Care-division. Medical technology completes the company portfolio. According to the board of directors, it is a business that suffers from remnants in IT-usage despite its high technological standards in other aspects. Even the finance division seamlessly fits into the Hearst company's portfolio, because most of the acquisitions are done in cash. Yet, as the acquisition of the Argyle stock exemplifies so neatly, the family is not keen on having others peeking into their financial files.
» Louis Pizzitola, Hearst over Hollywood, 2002
» David Nasaw, The Chief: William Randolph Hearst – The Rise
and Fall of the Real Citizen Cane, 2002
» Nancy Frazier, William Randolph Hearst: Modern Media Tycoon, 2001
» Nancy Whitelaw, Wiliam Randolph Hearst and the American Century, 1999