Shrewd and tough management helps keep Hearst a force to be
Even in an industry that routinely takes myths and packages them between
glossy covers or in 30-minute episodes, there’s something a little
special about the Hearst Corporation.
Partly, of course, it’s due to the film, Citizen Kane, a thinly veiled
portrait of the Hearst founder, William Randolph Hearst. Partly, too,
it’s in the bravado with which Hearst went about building his empire.
Starting with a west-coast paper his father had accepted as a gambling
debt, Hearst was in many ways responsible for shaping the modern
newspaper in the English-speaking world. He pioneered what might
legitimately be called tabloid tactics, introducing cartoon strips and
salacious stories to his titles. He was, in fact, the prototype media
baron, quick to spot the advertising potential in magazines and one of
the first into new media, branching out into cinema in 1913 and radio in
Hearst finally retired to his fairy-tale-like San Simeon estate in 1940,
but his family dynasty still rules to this day. The Hearst family did
lose control of the corporation after its founder’s death but managed to
recover the prize in 1974.
It has helped that the family has always fought shy of boardroom
nepotism. While it is true that 80-year-old Randolph Hearst graciously
ceded the chairmanship to his 68-year-old nephew, George Hearst, in
April this year, the fact remains that the chairmanship is a largely
ceremonial post. The corporation has actually been led since 1979 by its
president and chief executive, Frank A. Bennack Jr. It is Bennack who
first established close links with its sometime broadcasting partner,
Capital Cities/ABC. Bennack, who doubled the group’s TV interests, made
Hearst a more acquisitive newspaper proprietor and bought the successful
Redbook and Esquire magazines. And it is Bennack who is squaring up to
two of the biggest challenges the corporation has faced in its colourful
history - new media, and the difficulties facing magazines.
Magazines have had to face a multiplicity of problems, including high
paper costs, postal price increases and sharply increased competition in
Bennack’s solution was certainly unusual. Last summer, Hearst announced
plans to raise cover prices on 13 titles in its US magazines division by
between 18 and 33 per cent. At the same time ad rates were hiked by 5
per cent and circulations cut by an average 10 per cent. It was an
explosive cocktail and advertisers responded with predictable fury.
Kraft Foods pulled all its advertising, worth dollars 30 million, from
Hearst magazines and several other major advertisers, including the
fragrance giant, Elizabeth Arden, cut back spends sharply.
Now, nearly a year after the plan was first announced, most magazine
industry analysts are a lot kinder about the tough decision that Hearst
took - not least in cutting back at least two million magazine copies
every month to save an annual dollars 20 million on paper, postage and
Bennack’s second move was to replace the Hearst Magazines president who
had implemented the plan, D. Claeys Bahrenburg. He resigned last
November, after five years in the role, and was replaced by the dynamic
former publisher of USA Today, Cathleen Black, who has already had
considerable success in answering advertisers’ criticisms.
Chief among these is the perception that some of Hearst’s grand old
magazine titles are not ageing gracefully. It is a criticism that has
often been levelled at Cosmopolitan, which has seen its circulation fall
from more than three million to 2.5 million in a couple of years.
Bennack has now intervened to appoint Bonnie Fuller, a former Marie
Claire editor, as editor-in-chief designate at the title. The 73-year-
old incumbent, Helen Gurley Brown, responsible for much of the success
of the title in the late 60s and 70s, will step down.
However, real growth in this mature magazine market is mainly coming
from opportunities overseas. Last year, Hearst Magazines International
stretched its tentacles into Russia with the successful launch of both
Cosmopolitan and Good Housekeeping, and took Esquire to Korea and
Despite this, Bennack’s strategy since he joined the company has been to
try to reduce group dependence on magazine profits. Hearst picked up the
struggling Tampa station, WTMV, for dollars 28 million. The station is
affiliated to Time Warner’s WB Network, the first time Hearst has taken
on a channel not linked to one of the top four networks.
It could be the start of a new period of expansion for the corporation,
observers say. A division has been created in magazines to research
launches and brand extensions; in electronic media the company has been
among the most prescient performers. It invested in Netscape at just the
right moment and has a stake of around 30 per cent in Kid-Soft, a
branded direct selling channel for children’s computer software. In
March this year the corporation announced a deal with Compuserve’s new
online service for home use, WOW!.
By dint of shrewd management of existing properties and some canny
investments Bennack has steered Hearst into a position where, if it
can’t compete with the likes of Walt Disney or Time Warner on sheer
size, it’s at least well placed to make full use of assets that are the
envy of many media groups.
The hearst corporation
Hearst Magazines publishes 16 titles in the US, including Good
Housekeeping, which sells more than five million copies a month,
Cosmopolitan, Esquire and, in a joint venture, Marie Claire. The
National Magazine Company in the UK publishes Company and She magazines
as well as editions of Cosmopolitan and Esquire in a total of eight
monthlies. Internationally, 70 foreign editions are published across at
least 80 countries.
The Hearst Broadcasting Group owns local television stations in six US
markets, ranging from Boston to Kansas City, and is in the process of
completing the purchase of a seventh, in Orlando, Florida. It also owns
AM and FM radio stations in Baltimore, Pittsburgh and Milwaukee.
Hearst also has a stake in the cable network, A&E, a half share in
Lifetime Television and 20 per cent of the sports cable service, ESPN,
all with ABC/Capital Cities, now part of Walt Disney.
New Media and Technology
The Hearst New Media centre is a product development facility for the
World Wide Web and the group also has 1.5 per cent of the stock in
Hearst Newspapers has 12 local titles in the US, including the San
Francisco Examiner, the paper on which the empire was founded. King
Features Syndicate is the largest newspaper syndication company in the
A range of US-based business titles in the motoring, electronics and
health markets. Book publishing is centred on William Morrow and
Company and Avon Books; includes spin-off titles from the magazines.