Digital Publishing
8 mins read

Hearst President’s New Year note

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Dear Colleagues,

Welcome to the new year. I hope you had a restful and enjoyable holiday, a chance to take a moment from the hectic pace, and time to think about the priorities for the year ahead, both personal and professional.

After the break, I traveled to the Consumer Electronics Show in Las Vegas with a number of Hearst colleagues, and then on to the North American International Auto Show in Detroit, where I am today.

Standing on the massive floor of Cobo Hall, it’s clear that every business sector—media, technology, automotive and well beyond—is facing the very same dynamics: how to grow and innovate during a period of enormous change; which historical business practices are relevant and must be protected; which ones are not and should be discarded; where to double-down on existing franchises and where to incubate new ideas.

Jeff Bezos said it best recently when he offered this advice: “Companies need to be nimble and robust,” and I could not agree more. Here at Hearst, those must be our watchwords as well. We need to be robust in the way we leverage the scale and worldwide strength of our organization, and we need to be nimble in developing new products, forming new partnerships and adopting new content creation and business strategies.

While 2016 is still fresh in our minds, we should take great pride in how the global Hearst Magazines organization navigated a complex year. It was filled with record-breaking performances at many units, turnarounds in some areas, and challenges in others (in other words, what we call a “normal” year around here).

With 2016 now officially closed, I am pleased to report that Hearst Magazines increased its earnings for the third straight year, perhaps the only major publisher that can make that statement, and I am immensely proud of these results.

Our U.S. media unit, incorporating domestic print and digital operations, exceeded its profit budget once again. With monthly circulation of more than 32 million, Hearst Magazines is now the largest magazine publisher in the U.S. Six of our 21 print titles posted record financial performance, and it was a breakout year for Country LivingGood Housekeeping, HGTV MagazineO, The Oprah MagazinePopular MechanicsRoad & Track and Woman’s Day. We celebrated the 120th anniversary of House Beautiful and an impressive 170 years ofTown & Country. Any business that marks a 170th anniversary has truly seen it all—forget driverless cars, Town & Country was launched before the Model T! And the fact that Town & Country posted its highest earnings in a decade is a statement about the opportunities for all of our businesses—regardless of age—and the importance of teamwork. For 2017, we’re looking forward to celebrating 150 years withHarper’s BAZAAR, and we’ll be kicking off the festivities later this month with a glittering event in Los Angeles to celebrate the title’s list of 150 Most Fashionable Women in the World.

Our U.S. digital operations are a vital component of our economic success. Four years ago, we completely upended our strategy, and reimagined it, building one vast content ecosystem with the goal of sharing our most vibrant content across brands and geographies, without friction, cost or permission. In 2016, the strategy truly matured: Our U.S. digital team produced more than 80,000 pieces of content, ranging from short news items to impressive, long-form text/video productions; unique visitors climbed by more than 29 percent; revenue was up more than 31 percent, and our social audience reached 122 million. Delish.com was a standout performer, with monthly video views growing from 20 million to 500 million in record time. BestProducts.com, which was built in six weeks, helped us better understand the connection between content and commerce and quickly achieved profitability. The centralized digital newsroom published more than 2,000 news posts, essays and feature stories about the presidential election, driving more than 50 million unique visitors.

Jumpstart Automotive Media, which was a small business when we acquired it in 2011, posted another strong year of profit growth, as its unique set of tools connecting car buyers with automotive manufacturers became increasingly essential to marketers. Jumpstart and Car and Driver are the foundation of Hearst Autos, the division’s largest organic growth investment of 2016 and 2017, and we’re busy building a new, 100-person-plus team of product specialists, engineers, content creators and sales executives in Ann Arbor, Atlanta and New York.

2016 was also an important year for our division’s three business-to-business units. iCrossing came roaring back, posting very strong results. The ad agency business model is as disrupted as the consumer media business, and iCrossing’s new leadership is successfully transforming the company. iCrossing expanded its relationship with Bayer and Church & Dwight, and added the NBA, Workday and other top marketers to its client roster. iCrossing also made investments in two agencies that bring deep experience in content marketing and user experience design, and it has bolstered its capabilities in data science and U.S. Hispanic marketing.

Our CDS Global business has been part of Hearst for 35 years and processes nearly two-thirds of the subscription activity for the U.S. magazine industry, working with clients including Condé Nast, Meredith, Rodale and other leading publishers. CDS is also expanding into new verticals such as the nonprofit sector, serving some of the largest global 501(c)(3)s, including the American Heart Association, the American Red Cross and the Salvation Army. In 2016, CDS processed nearly 200 million payments and one billion transactions.

We welcomed KUBRA to Hearst in 2014, and in 2016, its earnings grew by more than 20 percent. As with CDS, the scale is enormous: KUBRA manages more than four billion customer interactions through its market-leading suite of customer experience, billing and payment processing products, serving top utility companies in the U.S. and Canada, along with a growing business serving local municipalities. In January 2016, we acquired iFactor, which provides communication products to utilities, and whose services and teams are being integrated into KUBRA, further strengthening this fast-growing, entrepreneurial unit.

With consumer media of all forms undergoing such change, these business-to-business companies are a key element of our growth strategy, and we plan to further expand that part of our portfolio in the coming year.

Around the world, our teams skillfully navigated the changes in their markets. Hearst Japan was our top-performing international unit in 2016, posting its seventh straight year of revenue growth and record profits. The team increased investment in its digital business, and launched Cosmopolitan in Japan as a digital-only product, powered by MediaOS. Hearst Magazines Taiwan registered its third year of earnings increases, up 26 percent, driven by continued organic growth of ELLE and the addition of Harper’s BAZAAR to the portfolio.

2016 was also an important year for Hearst China, as our team refocused the business and attracted new digital talent to position for growth in 2017. Hearst China staged its signature live events for ELLE and Marie Claire—events that have become multi-dimensional, with tens of millions of live-stream views and fully integrated sponsorships. March of 2017 will see a dramatic refresh of ELLE.

There was positive news from our European operations as well. Hearst Magazines Italy had its third straight year of profit growth and doubled its digital audience. Hearst Magazines Netherlands had its best results since it was acquired in 2011 and saw digital revenue growth of 30 percent. In Spain, print advertising increased for the first time since 2010, thanks in part to the celebration of ELLE Spain’s 30th anniversary. Last month, Cosmopolitan Spain returned to the company from a local licensee, a move that will drive further growth in 2017.

Hearst U.K. was our very first international unit, launched by William Randolph Hearst himself in 1910. Cosmopolitan continued its reign as the U.K.’s number one young women’s glossy magazine, and saw increased success of Cosmopolitan U.K. on Snapchat Discover. The event business doubled its profits, and the Hearst Made custom publishing division had a substantial revenue gain, with the growth of its relationship with grocery chain Asda and a new business win with Jamie magazine, celebrated chef Jamie Oliver’s monthly food, travel and lifestyle brand.

In Russia, we welcomed new partners at Hearst Independent Media, and our important joint venture, Hearst Shkulev Media, marked the 20th anniversary of ELLE Russia and acquired Woman.ru, adding significant digital scale to its operations.

Partnerships have long been a vital element of Hearst’s strategy, and important moves were made in 2016 that will further blossom in 2017. PubWorX, our joint venture with Condé Nast, merged our two companies’ production, procurement and portions of consumer marketing operations, and is off to a very smooth start.

We’re committed to growing our print platform, and in 2017, we will test two new products in the U.S.: first up is airbnbmag, which we’re producing in partnership with Airbnb, the company that has changed the way we travel. In June, we will roll out the first issue of The Pioneer Woman magazine, produced under our joint venture with Scripps, and alongside the noted author, lifestyle blogger and Food Network sensation Ree Drummond. And we’re pleased to expand our relationship with legendary fashion editor Carine Roitfeld, taking over the digital strategy and, through PubWorX, the print operations of her influential CR Fashion Book.

In its first year, Sweet, our joint venture with Snapchat, innovated with exciting partnerships and themed issues and paved the way to more experimentation on the Snapchat Discover platform. Cosmopolitan has the largest audience of all publishers on Snapchat, reaching tens of millions around the world on a daily basis, after launching first in the U.S., then the U.K., and now in France. An entire generation of young women are interacting with Cosmopolitan content every day on Snapchat.

Our teams produced more than 800 hours of programming on Facebook Live, our Instagram and Pinterest audiences are growing, our pop-up editorial project with highly-respected beauty editor Linda Wells is moving into its second phase, and we had great fun withEsquire’s revival of SPY, timed to the U.S. presidential election.

Our top priority for 2017 is continuing the integration of our U.S. and international business operations under our “One Hearst” initiative. Our best ideas, business wins, editorial scoops and exclusives, and more need to sprint from market to market and from brand to brand. We’ve made great progress increasing our interconnectivity, speeding innovation across our global network of nearly 80 countries, and we must get even better, quickly.

In 2017, we will implement new strategies, including the formation of content hubs in the U.S. and U.K., where collaborative teams will produce content across multiple brands, and even geographies. This may at first feel awkward to some, but I am confident we will easily adapt, with the goal of strengthening our products and finding new efficiencies, while always striving for excellence.

2016 taught the world an important lesson: Expect the unexpected. It was certainly true in politics, with unforeseen political outcomes the U.S., the U.K. and other countries. And it was true for the broad state of change, and at times, even tumult, across every industrial sector.

But while some geopolitical events were a shock, the most important constants also held true, starting with the remarkable intelligence, strength and diversification of our parent company, which backstops a commitment to further the growth of Hearst Magazines through innovation, organic investment and acquisitions. A period of great change and disruption plays to the unique strengths of Hearst: the financial strength of the corporation, our rare ability to partner with companies new and old, large and small, and an agile team that has proven that it can evolve better than virtually any of our peers.

So my thanks and gratitude to the most valuable constant of all: our colleagues around the world. While we talk about global scale, financial strength and fast-paced business strategies, it’s the people of Hearst that drive our success. Always.

That gratitude also extends to those around you—your families and loved ones. Their roles as support systems and sounding boards is also a big part of our success—past, present and future. We could not do it without you—or them.

While this letter is long, our plans for 2017 may be summed up in one sentence: we will strive to be both nimble and robust, and always appreciative of the 10,000 colleagues who work hard every day to make our editorial products come alive, strengthen the bond with our key audiences and clients, and make Hearst Magazines a company, and a culture, that we can all be proud to be part of.

I could not be more excited for all that is to come in this new year.

My thanks to you,

David Carey