The Hearst Corporation

FOUNDED: 1887

Contact Information:

HEADQUARTERS: 959 8th Ave.
New York, NY 10019
PHONE: (212)649-2000
FAX: (212)765-3528
EMAIL: pphillips@hearst.com
URL: http://www.hearstcorp.com

OVERVIEW

The Hearst Corporation is a media mega-company that operates newspapers, magazines, book publishing companies, television and radio stations, and many other media outlets, including ventures into new media.

Hearst Magazines is the world's largest publisher of monthly magazines. These include 16 U.S. titles and more than 90 international editions distributed in more than 100 countries. Hearst Newspapers publishes a dozen daily newspapers and seven weekly newspapers, and maintains a Washington news bureau. Hearst Broadcasting operates television and radio stations and a television production company. The formation of Hearst-Argyle Television Inc. in 1997 propelled Hearst into the ranks of leading U.S. television broadcasting groups. Hearst-Argyle, a public corporation reaching more than 10 percent of U.S. television-viewing households, was created when Hearst Broadcasting merged with the former Argyle Television Inc. Hearst is the majority shareholder of Hearst-Argyle Television, which is one of the largest U.S. independent owners of television stations.

Hearst's Entertainment & Syndication Division combines its cable network partnerships, television programming and distribution activities, and various syndication companies. Hearst is a partner or holds interests in several leading cable television networks, including the History Channel, Lifetime, ESPN, ESPN2, A&E, and Classic Sports Network. Another key part of this division is the King Features Syndicate, which is the world's largest distributor of comics and newspaper columns. Among its well read properties are "Hints from Heloise," "Blondie," and "Beetle Bailey."

Book publishers William Morrow & Co. and Avon Books are the two major imprints of the Hearst Books/Business Publishing division. Morrow is a publisher of hardcover books, while Avon publishes paperbacks. In addition to books published under those two imprints, the division publishes a number of books each year for special audiences, as well as a number of magazines. These range from books on electronic design and automotive engineering to Floor Covering Weekly and Diversion, a leisure time magazine for doctors.

Hearst's New Media & Technology division is blazing trails on the Internet and elsewhere as technology creates new markets for Hearst products. The division works with all Hearst groups to adapt existing products and resources to formats appropriate for new delivery systems such as the Internet.

Extensive real estate holdings are maintained by the Hearst Real Estate Division. These include timberlands and farming operations in California, along with commercial properties in San Francisco and New York City. The famous Hearst Castle, perhaps the best known piece of Hearst property ever, no longer belongs to Hearst, having been deeded to the state of California after the death of William Randolph Hearst in 1951. Located on the central California coast near San Simeon, the home is today a popular tourist attraction.

COMPANY FINANCES

As a privately held company, Hearst Corp. does not report full details on its financial operations. However, it is known that 1997 revenue for Hearst reached $2.7 billion, an increase of 5.1 percent over 1996 revenue of $2.57 billion. Revenue in 1995 totaled $2.51 billion, compared with 1994's $2.29 billion.

HISTORY

The history of the Hearst Corporation is overshadowed by the mythos surrounding its founder, William Randolph Hearst. Larger than life is his story and so public that the debate continues as to whether indeed Orson Welles, in his debut film Citizen Kane, patterned the life of his Charles Foster Kane after Hearst. There are those who claim Welles originally had another mogul in mind while crafting the movie—possibly Howard Hughes, whose life Welles examined briefly as part of his late-career film F is for Fake.

Young Hearst was handed control of the San Francisco Examiner in 1887 after his father, George, was elected to the United States Senate; the elder Hearst had reportedly gained ownership of the newspaper as payment for a gambling debt. Hearst's vigor and dramatic revision of the Examiner is almost legendary, and indeed is seen as having forever changed the face of American journalism. "He pioneered what might legitimately be called tabloid tactics," according to an article in the British magazine Campaign, "introducing cartoon strips and salacious stories to his titles. He was, in fact, the prototype media baron."

Hearst's next purchase was the New York Journal in 1895. His acquisitions continued, and in the 1920s Hearst owned newspapers throughout the United States. Company history holds that in that era "one in four Americans read a Hearst newspaper."

It was the Journal purchase that put Hearst in a head-to-head battle for circulation with another newspaper magnate, Joseph Pulitzer, owner of the New York World. The rivalry during the era of the Spanish-American War gave rise to what is known as "yellow journalism." The newspaper became more than a chronicle of news; it also, under Hearst, became a means by which he communicated his views, both personal and political.

As Hearst continued to acquire newspapers around the country, he also began to look to other emerging media. These included magazines, film, and radio, in all of which the company became involved before 1930. The company, for example, started the Hearst-Selig News Pictorial, a film newsreel production company that dominated film journalism in the 1920s.

For many observers of the Hearst empire, 1935 is seen as the year the company was at its height. Hearst controlled 19 newspapers, King Features Syndicate, international news and photo services (which would become folded into United Press International), 13 magazines, 8 radio stations, and 2 motion picture companies. Despite his success, in 1937 Hearst had to step down from the business and sell many of his properties, including a portion of his estate in San Simeon, to avert bankruptcy.

Upon Hearst's death in 1951, Richard Berlin, who had overseen the company since 1940, was made chief executive officer. The Hearsts kept a semblance of control over the company through a trust but didn't actually regain control until 1974.

Frank Bennack was appointed head of the company in 1979. Under Berlin the company had been pared down; Bennack, however, went on a spending spree, purchasing television stations, magazines, and other daily and weekly newspapers through the 1980s. Bennack also closed the doors of the legendary Los Angeles Herald Examiner in 1989.

New technologies signaled further changes for the Hearst Corporation as the 1990s began. Hearst made a major foray into the so-called new media arena with the establishment of its Hearst New Media & Technology group in 1993. This particular division works to create content in various electronic media based on its existing products.

George Hearst Jr., nephew to the founding family, assumed control of the company as chairman from Randolph A. Hearst in 1996. In March 1997 Hearst and Argyle Television Inc. announced an agreement to merge 6 Hearst television stations with 6 owned by Argyle to form Hearst-Argyle Television Inc. The 12 stations owned by Hearst-Argyle, along with another 3 the company will manage, reach nearly 12 percent of the U.S. television audience. Among the 12 television stations owned by Hearst-Argyle are 9 ABC-affiliated stations, more than any other television station group other than ABC itself.

In January 1998 Hearst announced the acquisition of Medi-Span Inc., an Indianapolis-based supplier of drug product information to the healthcare industry. Medi-Span joins Hearst's First DataBank Inc. of San Bruno, California, to become the corporation's second electronic drug database company. First DataBank, which supplies drug, nutrition, and medical information to healthcare companies and institutions, was acquired by Hearst in 1980.

STRATEGY

The San Francisco Examiner and San Francisco Chronicle have been in a joint operating agreement since 1965. Under this arrangement, also known as a JOA, two newspapers in the same market maintain separate news and editorial departments but share their business operations and split profits evenly. This San Francisco agreement is to last until 2005. Each paper holds the right of first refusal to buy the other.

According to a rival news service, "Hearst executives, rebuffed twice on offers to buy the Chronicle in recent years, have now proposed closing the Examiner. Hearst would hold a minority interest and grant Chronicle owners a substantial majority interest, perhaps as much as 60 to 65 percent, in a restructured joint operating agreement." The caveat: Hearst wants control of the combined newspaper. The company acted similarly in its dealings in the San Antonio market in the 1990s. Rumors throughout the 1990s abounded as to the future of the Examiner.

"'The Chronicle has a capitalization shortage, a lack of a strategic plan, and short-term management', said a [DeYoung] family member [owners of the Chronicle]. 'That is a risky environment for the investor. That can be very dangerous. If we get the right deal at the right price, family members will be well-served'."

THE ENCHANTED HILL

More than 1 million people visit the Hearst Castle each year. William Randolph Hearst built the lavish "La Cuesta Encantada," or Enchanted Hill, during his lifetime, but deeded it to the State of California when he died in 1957. The enormous castle is a result of 28 years of work between Hearst and architect Julia Morgan. The building sits on a hilltop overlooking the Pacific Ocean and rests in the beautiful countryside of San Simeon, California. The architectural masterpiece offers 127 acres of gardens, terraces, and pools; 165 rooms in 4 different houses; and a zoo. Hearst was an avid collector of art and artifacts; and accordingly, his palace is filled with Italian and Spanish treasures. The grounds and castle are open to the public for tours.

INFLUENCES

Hearst has had a number of problems in its magazine division; high paper costs, postal price increases, and intensified competition for advertising dollars. In 1995 Hearst announced plans to raise cover prices on some magazines between 18 and 33 percent and to raise advertising rates 5 percent; coupled with this, circulation was cut approximately 10 percent. The annual savings realized was about $20 million per year. "It was an explosive cocktail and advertisers responded with predictable fury," according to Campaign. "Kraft Foods pulled all its advertising, worth $30 million, from Hearst magazines, and several other major advertisers, including the fragrance giant, Elizabeth Arden, cut back spending sharply." Bennack also replaced employees within the division, not the least of whom was Helen Gurley Brown, the grande dame of Cosmopolitan, who was replaced as editor-in-chief.

CURRENT TRENDS

Hearst made a major foray into the "new media" arena with the establishment of its Hearst New Media & Technology group in 1993. Designed to guide and manage the company's interests in the media, according to company literature, this particular division works to create content in various electronic medium based on its existing products. Employees are trained at the Hearst New Media Center, which also oversees digital production. In 1995, the company joined with eight other large newspapers to form New Century Network, designed to create a national network for online newspaper services. It also has interests in software applications and products, such as Netscape Communications.

PRODUCTS

Hearst's 12 newspapers include the Albany Times Union, Beaumont Enterprise, Edwardsville Intelligencer, Houston Chronicle, Huron Daily Tribune, Laredo Morning Times, Midland Dailey News, Midland Reporter-Telegram, Plainview Daily Herald, San Antonio Express-News, San Francisco Examiner, and Seattle Post-Intelligencer. The company publishes weekly newspapers in Texas and Michigan, and has a Washington, D.C. news bureau. It also operates Hearst Entertainment & Syndication, of which King Features Syndicate is a part.

Hearst Broadcasting is one of largest independent broadcasting groups in the nation. The company has television and radio stations in Baltimore, Boston, Milwaukee, and Pittsburgh as well as television stations in Dayton, Tampa, and Kansas City. Hearst has interest in cable networks including Lifetime Television, The History Channel, ESPN and ESPN2, and other stations and production subsidiaries.

Hearst Magazines titles include Colonial Homes, Cosmopolitan, Country Living, Esquire, Good Housekeeping, Harper's Bazaar, House Beautiful, Marie Claire, Popular Mechanics, Redbook, and SmartMoney. The company also has magazine and newsstand distribution as well as subscription fulfillment services.

The company's business also includes Hearst Books/Business Publishing (William Morrow & Company, Avon Books), Hearst New Media & Technology (shareholder in New Century Network, Netscape Communications, and Books that Work), and Hearst Real Estate.

CORPORATE CITIZENSHIP

In the spring of 1997 Hearst Corp. announced the formation of a Speakers Bureau program under which senior Hearst executives would visit college campuses to address students on a wide variety of topics relating to the media. The program came as part of an outreach effort by Hearst, following extensive dialogue with professors, department heads and deans of universities, colleges, and journalism schools, to establish contact with students at graduate and undergraduate levels. In announcing the program, Gloria Ricks, Hearst's deputy director of corporate communications and the overseer of the Speakers Bureau program, said: "We want to build stronger, closer ties with the most recognized and widely acclaimed institutes of higher learning. We know that our future employees and industry leaders are students in America's schools today."

GLOBAL PRESENCE

Hearst distributes more than 90 international editions of its magazines in more than 100 countries worldwide Hearst Magazines International, which is headquartered in New York City, oversees the publication of Hearst's leading consumer titles, around the world. These international editions are published through joint ventures, partnerships, and licensing arrangements, using material from the U.S. parent editions and other international editions and creating original content appropriate for each national or regional edition.

In the United Kingdom, the National Magazine Company Ltd., a subsidiary of Hearst since 1910, publishes nine monthly titles, including the British editions of Good Housekeeping, Country Living, Cosmopolitan, Esquire, and House Beautiful, as well as the popular women's titles Company, SHE, and Zest.

SOURCES OF INFORMATION

Bibliography

Cook, Richard. "Hearst Buys and Diversifies to Protect its Media Empire." Campaign, 21 June 1996.

Ewell, Miranda. "San Francisco Chronicle, Examiner Merger Talks Move Forward." Knight-Ridder/Tribune Business News, 22 March 1996.

"The Hearst Corporation." Hoover's Online, 17 May 1998. Available at http://www.hoovers.com.

The Hearst Corporation Home Page, 17 May 1998. Available at http://www.hearstcorp.com.

For additional industry research:

Investigate companies by their Standard Industrial Classification Codes, also known as SICs. Hearst's primary SICs are:

2711 Newspapers

2721 Periodicals

2731 Book Publishing

4832 Radio Broadcasting Stations

4833 Television Broadcasting Stations

4841 Cable & Other Pay TV Services