Media Fortune Fame & Folly

Hearst searches for life after magazines

Hearst Magazines, of the US, has acquired the Clevver YouTube news channels aimed at millennial women, which self-describes as “the intersection of pop culture and internet culture”. The channels were owned by the now-defunct Defy Media which once boasted almost $50m revenue.

The deal brings together Clevver’s claimed audience of over 15m subscribers (or at least those which have remained loyal during turbulent recent times) with Hearst’s 128m digital audience. This deal, which is all about a pretty well established brand and some original content, may be the most significant one for Hearst Magazines since it stepped out of its comfort zone and appointed digital whizz, former Say Media boss Troy Young as president last year.

Among other things, Young began the process of subordinating print to digital, and to building digital-only brands to compete alongside print, like the content-rich e-commerce site BestProducts. com. He has also captured the essence of a stubborn women’s magazine industry that has found it easy to patronise the influencers, bloggers and social media voices that can make it look old-fashioned: “We’re not news, and we’re not entertainment—we’re passion.” But print weighs heavily on Hearst which remains one of the world’s largest magazine publishers with 25 brands in the US, 18 in the UK and more than 250 licensed editions worldwide, including Cosmopolitan, Esquire, Elle, Men’s Health, Good Housekeeping, Harpers Bazaar, and Car & Driver.

If print die-hards and Young (no respecter of worn-out reputations) needed any reminder of how far the mighty magazines group has fallen in the affections of its parent company, it came from Hearst Corp CEO Steve Swartz’s 2019 letter to staff. In a year when Hearst Corp increased its revenue by 4% to $11.4bn, fully one-third of its estimated $1.4bn operating profit came from the fast-growing business and professional media, including its largest company, the now wholly-owned financial group Fitch.

Hearst’s 100% digital and subscriptions business media companies accounted for the majority of its $3bn investment spending during the year. This time next year, business media may account for 40% of profits. And, while Swartz noted that consumer media is still Hearst’s largest profit-maker, he doesn’t mostly mean newspapers or magazines (both of which recorded a drop in profits last year), but television channels including shareholdings in companies like ESPN.

The 132-year history of the nicely collegiate Hearst Corp is uniquely defined by a rotating portfolio which has generated its largest profits, in turn, from: newspapers, magazines, TV, and business media. One division hits a wall and the next one takes over while the troubled child sorts itself out. In the last decades of the 20th century, magazines accounted for most of the Hearst Corp profit, which once prompted long-term leader Frank Bennack to credit Cosmopolitan’s Helen Gurley Brown with single-handedly funding the spectacular Hearst Tower in Manhattan.

This year, magazines merited less than 5% of the content of Swartz’s cheerleading letter. Not one of the company’s long-standing magazine brands was even mentioned: the CEO had better things to talk about. With print revenues continuing to decline, Hearst Magazines is likely to make many more acquisitions, not least to create new opportunities directly for legendary magazine brands before they are drowned by digital.

We should expect more video investments like Clevver but also some much larger deals, perhaps even joint ventures that could bring together the company’s diverse search for opportunities in brand licensing, e-commerce, events, and digital video. Could Hearst capitalise on its established relationships with female consumers by providing high-value B2B research and consulting services to marketers whose own focus has switched from advertising to data? Could the Cosmopolitan magazine that has empowered generations of young women become the brand for a mainstream provider of health, education, counselling, and training? Could the brilliant Good Housekeeping Institute become a much bigger licensing brand than Meredith’s runaway Better Homes & Gardens? Ultimately, Hearst Magazines needs to reinvent itself – just like its own parent company.

It must find new ways of earning profits, whether from existing audiences, re-worked brands or completely new lifestyle media, information and entertainment services. That reinvention may depend on substantial acquisitions to help change the company’s centre of gravity. Like daily newspapers, major magazine brands continue to have real brand strength, influence and credibility, even in economic decline.

These traditional brands can be powerful platforms for new products and services. But there are some impediments: publishers must be able to cannibalise (and/or compete with) existing brands in order to create new ones. It’s more about attack than defence – and creating new mainstream businesses, other than as mere ancillaries for print magazines which themselves are becoming ancillary for so many consumers.

Troy Young captures the challenge in magazine-media’s search for a 21st century strategy: “People crave the human connection and the personalities that influencers represent. We create content, but we don’t create talent that represents the brand. That’s a new muscle for us. I always ask: What will make us more influential?” For now, though, Hearst continues to paper over the cracks: look at the huge numbers of free copies that are padding its UK circulations for the supposed benefit of advertisers.

Like so many of its peers, Hearst Magazines must become as data-driven (and, therefore, as media agnostic and revenue-diverse) as, for example, the B2B media companies that successfully escaped from their dependancy on print. It’s easier said than done, especially if most of your people are… producing magazines. But, if anyone can do it, Hearst can. Troy Young’s own appointment and the company’s investment in digital studios show that. Apart from much else, a symbolic change of name from Hearst Magazines can’t come fast enough.