‘Media is much harder than it looks’: A conversation with Hearst’s David Carey

Half of Hearst's revenue is from business-information services

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This week: A conversation with Hearst’s David Carey, contemplating whether Bloomberg is cool and Hollywood’s summer of discontent. First a message from The Rebooting supporter Permutive.

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“The company’s had a very broad view of content”

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Traditional media companies like Hearst face the same pressures that have pummeled BuzzFeed into delisting territory, bankrupted Vice and left other digital players struggling. The advantages of maturity – Hearst’s history stretches back to 1887 – is you tend to be more diversified.

Hearst has expanded its revenue 22% over a decade to reach $11.8 billion, with 50% of those profits coming from business-information services business as opposed to 13% a decade ago. These days in the media business, it’s safer to have a SaaS provider of information services for aircraft maintenance as a sibling.

Hearst is most known for its marquee magazine assets like Cosmopolitan, Esquire, Elle, Good Housekeeping, as well as newspapers like the Houston Chronicle and San Francisco Chronicle. But it is also home to data businesses in logistics and finance. It is continuing to expand its presence in local TV, recently acquiring a station in the booming Southwest Florida area.

On this week’s episode of The Rebooting Show, I was joined by Hearst’s David Carey to discuss the resilience of so-called legacy media businesses. David returned to Hearst in 2019 as svp of public affairs and communications after a stint at Harvard, picking up on an eight-year run as president of Hearst Magazines from 2010 to 2018. He was group president at Condé Nast for many years, as well as the founding publisher of Smart Money.

Some highlights from our discussion:

The broad view of content: Hearst used its media assets to diversify into information services. Fitch Ratings is its largest business, and in 2016 it spent $2 billion on Camp Systems, a software provider for the airline maintenance business. “The company's had a very broad view of what content is, and, boy, is that to the benefit of everyone who works here.”

The end of the shiny object era: “There was a lot of chasing whatever the latest thing was, but those businesses turned out not to be sustainable, or they turned out to be gimmicks, or they turned out to be easily replicated by others. It’s chaos in all directions for all media forms. It very much favors companies with real strategies, deep roots.”

Media’s always been hard: “Media is much harder to operate than it looks from the outside. That's always been true. It's easy to make a splash and make some noise, but even the latest upstarts are finding it's really hard to build a sustainable business that engages people on a regular basis.”

Media businesses need a bigger price curve: “Whenever I meet a [Wall Street] Journal executive, I tell them, you should come up with a $1,000 a year subscription, because I would pay that. It's that important. to how I operate in the world as an executive. Every brand has these concentric circles of diehard fans and next diehard fans and so on. The problem is there hasn't been effective price discrimination.”

Print is like a couture fashion show: “What they send down the runway is important but not their biggest business. What happens at Chanel at a couture show, that business is relatively small, but it sets the stage for everything below that. It's the eyewear, the handbags, the accessories. Ultimately they make their money from selling beauty products at Bloomingdale's and in Saks Fifth Avenue. You're starting to see that happen with magazines. They have an opportunity to become multi-tiered businesses. The print piece becomes the standard bearer [to more lucrative businesses like events and data].”

Check out the full episode on Apple, Spotify or other podcast services. And if you have a chance, leave the show a rating and review.

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The Cool Down turns one – and hits profitability (on a monthly basis). The climate-focused site from Bleacher Report founder Dave Finocchio now reaches 20 million uniques a month. Dave and I discussed The Cooldown in an episode of The Rebooting Show earlier this year. (LinkedIn)

The Economist’s dilemma: Its strengths in a clear point of view, consistency and focus on analysis doesn’t lend itself to standing out from the media maelstrom, which often requires controversy or breaking news. The Economist’s editor sees a path into being more “present” in the rollicking conversations of the day, if only to guard against slipping into the irrelevance of many news weekly peers. (Vanity Fair)

Is Bloomberg cool? Semafor has a funny chart from Robinhood spinout financial news company Sherwood’s pitch deck plotting business and finance titles in a 2 x 2 with a uncool x cool axis. It has some credibility because Sherwood placed itself in the upper right. (Semafor)

The media industry’s summer of discontent: Hollywood is shut down for the first time in generations. The struggle is a product of the distribution shifts the entertainment industry is facing in the streaming era, which means different economics. Lurking in the background is, of course, the application of artificial intelligence. (CNBC)

AI mimicry: “The machine is not having anything like a human learning experience. It’s playing on the surface with language, but the emotion-drenched process of learning from actual experience and the hard-earned accumulation of what we call wisdom are absent.” (David Brooks)

Dissecting sustainable publishing models: FT Strategies, the consulting arm of The Financial Times, linked up with Google News Initiative for an in-depth study of the characteristics of sustainable news publishers. (The News Sustainability Project)

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Thanks to Permutive and Sovrn for sponsoring this edition of The Rebooting. If you’re interested in discussing sponsorships with The Rebooting, check out our sponsorship kit.