How Data and Software Businesses are Rescuing Hearst

There are some notable pearls about Hearst’s evolving business in CEO Steven R. Swartz’s year-end letter to employees. Most notable is the company’s continued expansion of its Business Media group, which provides data and software to the healthcare, financial, automotive, and aviation industries. Despite flat revenue of $10.8 billion, Hearst was able to achieve record profits, thanks to the Business Media group, which accounted for 28% of total profit, a three-fold increase over the past decade. Sales of some investments also helped, but how much is not disclosed. Hearst has been pursuing diversification into business information and data for decades, slowly and steadily making acquisitions, and Swartz’s letter notes disappointment that the company was unsuccessful in making any acquisitions in this space in 2017. Nevertheless, the success of its diversification is underscored by Swartz’s candid appraisal of the challenges facing Hearst’s TV, magazine, and newspaper businesses in the age of Google, Facebook et. al.: “2017 was a great year to be a consumer of media products but less so to be a provider of that content.” Hearst isn’t the only media company to have pursued business information. Thomson (prior to its merger with Reuters) divested its sizable newspaper holdings to successfully pursue financial, legal, and other business information. The UK’s Daily Mail Group, noted for its newspapers, has over several decades built a portfolio of information businesses serving the insurance, property, energy, education and finance sectors that now accounts for half of its revenues and two-thirds of its profits. Regardless of whether better times return for Hearst’s consumer media, business data and software appear destined to increase their overall importance at the company.

About Lee Greenhouse

Longtime strategy consultant focused on the business of information content, applications, and services.
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