“Today’s readers are passionately involved with ‘their’ magazines—our magazines! They write us, they e-mail, they call, they suggest stories, they share their own
experiences. They do these things online and off, wired and wireless. They have committed relationships with their favorite Hearst magazines in every brand venue.” –Cathie Black, President, Hearst Magazines
Black has three strategies for reaching existing and new audiences: building and growing Hearst’s core titles in the U.S. and around the world, amplifying their presence in digital media, and acquiring and launching new brands in the print and digital realms in the U.S. and abroad.
It was a record year for Hearst Magazines, as total revenue set a new high, and it was the Group’s second-best earnings performance ever. Cosmopolitan; O, The Oprah Magazine and Good Housekeeping continued to lead the portfolio, with O posting its seventh consecutive year of earnings increase, up 10 percent over the previous year. Magazine readers have stayed loyal through thick market stresses and thin consumer spending in many other areas. The newsstand market continues to be under pressure from retailers and wholesalers.
Subscription dynamics absorbed a 10 percent postage hike in 2007. Paper costs decreased in 2007, but major producers have now idled some plants, reducing total North American output by almost 20 percent, and now prices are going back up.
“Through it all, Hearst Integrated Media posted its tenth consecutive year of record paging and revenue,” said Michael Clinton, Hearst Magazines’ executive vice president, chief marketing officer and publishing director. “While there is a changing media landscape, print advertising remains strong. In core businesses such as fashion, retail, beauty, packaged goods, food and pharmaceutical, we saw significant gains, as marketers continue to recognize the strength in magazine audiences.”
At the Group’s core domestic magazines, comprising 15 titles, total advertising revenue was up 4 percent. Although ad paging overall was up just 2 percent over 2006, Harper’s BAZAAR surpassed its 2006 record year in ad paging by 18 percent. Redbook surpassed its 2006 record by 8 percent. With a frequency increase from six to seven issues in 2007, Veranda posted a record 6 percent ad paging increase. O, The Oprah Magazine also set another record ad paging year, breaking its previous record, set in 2006.
O, The Oprah Magazine; Redbook and Veranda had record years in total combined advertising and circulation revenue. Subscription renewal rates of core magazines achieved record levels as well, aided by automatic renewal billing.
In 2007, Hearst’s Digital Media unit relaunched all 12 magazine-branded Web sites previously on iVillage onto a new Hearst platform, created three new Web sites and launched nine mobile sites. The Web sites are boosting ad revenues and magazine subscription orders; in 2007, full-year net paid subscriptions from all division Internet services were close to 1.6 million. That translates into a 72 percent increase from 2006, noted John Loughlin, executive vice president and general manager, Hearst Magazines. “Diversity in our branded sites gives us the freedom to put both classic and new offerings online with equal presence and passion,” Loughlin said. “The proprietary technology we’ve built allows us to be an equal-opportunity branding vehicle.”
In December 2007, Hearst’s total online presence—including its new online-only brand acquisitions: eSPIN, eCRUSH, RealAge and Kaboodle, along with thedailygreen.com—
attracted about 152 million monthly page views. Unique visitors across the Group’s digital activities increased 246 percent, to nearly 19 million per month.
“When you look at these kinds of increases, you can see how powerful the combination of print and digital really is,” Black said. “Yes, they complement each other, but they have their own distinctive strengths, which we plan to leverage by cross-pollinating the brand. By branding Hearst content, we can deliver to consumers on their own terms.” Hearst Magazines’ brands and their strong connections with readers are also the keys to success for Hearst Magazines International (HMI).
“We export the power of our brands across markets and cultures,” said George Green, HMI’s president and CEO. “We’re in the right places to ride the economic growth of developing and expanding markets.” The brand power shows: HMI posted a 37 percent earnings gain for the year. All international entities accounted for approximately 36 percent of the Group’s 2007 profits. Hearst publishes about 200 titles—including those with joint-venture partners—globally.
Strong economic conditions around the world led to a significant increase in earnings in 2007. Three led the way: Russia, up 36 percent; China, up 34 percent, and Ukraine, up more than 50 percent. New international launches in 2007 included Harper’s BAZAAR in Dubai; Esquire in Spain and Romania, and Town & Country in the Philippines. In Japan, Town & Country joined Seven Seas, published as a double-branded lifestyle magazine for affluent readers.
According to Green, developing HMI’s digital presence depends on each country’s technology, including availability of broadband. “When it comes,” he said, “you’ll see a lot of the same things you see in the USA right now, with media companies like Hearst making big investments in online capability. A lot of the learning we are doing at home can now be used in other markets.”
In the U.K., the National Magazine Company (NatMag) experienced a 29 percent increase in profits over 2006. NatMag saw especially strong performances by Cosmopolitan and Good Housekeeping, and the company’s joint venture with CVC (formerly ACP) and Rodale.
Hearst Integrated Media delivered its 10th consecutive year of growth in 2007. This Hearst Magazines Division arm, which combines major client advertising with customized and integrated marketing services, saw increases in advertising revenue and page gains of nearly 8 percent and 2 percent, respectively, over 2006.
The unit sold and produced 26 multi-title, multi-platform custom marketing projects in 2007, including the annual 30 Days of Fashion and 30 Days of Beauty initiatives.
In the Group’s circulation services business, newsstand distributor Comag Marketing Group had a very strong year, posting its best performance in recent history. CDS Global, formerly Communications Data Services, launched a multi-year rebuild of systems, processes and services to support its customers’ increasing digital demands. Periodical Publishers’ Service Bureau also had a strong year, with earnings up over 2006.
With the sluggish economy and push-back at retail, Hearst Magazines will look for every opportunity to operate more efficiently and cost-effectively in the upcoming year.
“Future success depends on aggressively building digital businesses while growing our core magazine portfolio through acquisitions and start-ups,” said Black.
