Hearst Magazines digital subscriptions now generating profits

Hearst Magazines president David Carey says in his New Year’s letter to employees that at year’s end, the company had 800,000 monthly digital subscriptions in the U.S. — the highest in the industry.Unknown “Those subscriptions are now generating profits after 24 months of investment,” he writes. Carey also writes that Esquire editor-in-chief David Granger will soon announce “a bold new partnership — an initiative that will dramatically expand the Esquire franchise.” He adds that the magazine “has big plans in the works to celebrate its 80th anniversary this year.”

Read Carey’s letter to employees after the jump.

From: David Carey
Date: Wednesday, January 2, 2013 8:30 AM
Subject: A New Year’s Letter

Dear Colleagues,

Happy 2013! Welcome back after what I hope was a wonderful holiday break for each of you. If you were minding business at the office last week, I trust you also found it a peaceful place to be.

As we begin a new year, I want to take stock of our company’s accomplishments in the last year and look forward to what’s on tap for the coming one.

David Carey

David Carey

We have been thrilled by consumer response to the new print products we introduced, led most notably in the U.S. by HGTV Magazine and, globally, by 10 new Hearst international editions, including Esquire in Singapore and Colombia and Harper’s BAZAAR in Poland. We’re also enthused by the pace at which our content is ricocheting around an increasingly mobile world. At the end of 2011, we had 39 million monthly page views on mobile devices; by the end of 2012 that number had grown to 186 million.

But no question, 2012 will not be remembered as mellow in either media or meteorology.

Many of our businesses soared and produced record results. Others faced challenges, and the teams behind these brands have put in place fresh thinking for 2013. While in the past our businesses tended to move in unison — collectively, up or off — I believe that the variability and volatility of performance is here to stay, which puts a greater emphasis on the impressive can-do spirit and creativity of our teams.

Whether you were doing business in sunshine or in storm, so many of you pushed ahead—continuing the enormously imaginative work of expanding our company’s reach and influence. I want to thank all the teams that make Hearst Magazines great.

The barometer of our 2012 performance marked important developments. Our core print brands were honored with a raft of prestigious awards: three National Magazine Awards, total domination of Advertising Age’s A-List, including Magazine of the Year Marie Claire and Publisher of the Year Nancy Berger Cardone, numerous Folio: Eddie and Ozzie Awards, and an Adweek Hot List nod for HGTV Magazine.

More of our greatest brand hits last year:

* ELLE had very strong growth in its first full year of Hearst ownership, gaining market share and becoming our second-largest business in the U.S.

* HGTV Magazine, created in partnership with Scripps Networks, ended its first year with nearly 700,000 paid subscribers, producing average monthly newsstand sales of more than 250,000 and strong reception from advertisers. This year, the title will move to 10 issues annually.

* Harper’s BAZAAR had a perfectly executed redesign that has been a hit with readers and advertisers, and Good Housekeeping introduced a new look and feel in its January issue, a front-to-back revamp driven by extensive consumer research and testing. Now under way: a dramatic restyling of Road & Track and a new direction for Redbook.

* Marie Claire’s powerhouse publishing team delivered the most revenue ever in the magazine’s 18-year U.S. history.

Already the No. 1 epicurean magazine on the newsstand, Food Network Magazine had a sales jump of 18 percent last year and earned the top spot for ad pages in its category. Projected FNM circulation for 2013: 1.55 million.

In keeping with our UNBOUND positioning, we made impressive gains in digital media. By the end of the year, we counted nearly 800,000 monthly digital subscriptions in the U.S. across iPads, NOOKs, Kindle Fires and Android devices—the highest in the industry. Those subscriptions are now generating profits after 24 months of investment. And how exciting to see how this business is developing organically: More than 80 percent of our digital subscribers are new to our files, and their engagement levels meet or exceed the high levels we see from our print products.

We achieved important digital milestones all across the company:

* The number of unique monthly visitors to our websites grew by more than 30 percent. Our brands have driven an explosion in social engagement with their audiences; Hearst has 7.7 million Facebook fans, 4.7 million Twitter followers and 5.5 million Pinterest followers, including the No. 1 brand on Pinterest, Harper’s BAZAAR.

* Cosmopolitan doubled the size of its digital edit team in December, with the goal of reaching 20 million monthly unique visitors. The magazine also used a multi-pronged social media strategy engineered by iCrossing to welcome new editor in chief Joanna Coles: 18 million tweets announcing Joanna’s move were sent in just a few hours. (The brand is also active on the TV front: Watch for Cosmo as a star of a new Mark Burnett series debuting in February.)

* Jumpstart, a key asset from our Lagadère acquisition, had the most profitable year in its history. Jumpstart grew to become the No. 3 website for auto shoppers, with more than 9.5 million monthly unique visitors.

* Innovation flows in all directions in our halls: Hearst’s popular foodie destination Delish.com introduced a print special that was sold with the November editions of six titles at Wal-Mart, producing a 22 percent lift in single-copy sales.

We welcomed new faces last year and, in some cases, rearranged places. Chief Technology Officer Phil Wiser, who joined Hearst Corporation last January, quickly became a key resource for our technology teams. In addition to Joanna at Cosmo, we named three new editors in chief: Susan Spencer at Woman’s Day, Larry Webster at Road & Track and Anne Fulenwider at Marie Claire. We were also pleased to welcome Carine Roitfeld as global fashion director of BAZAAR, who, in an industry first, will create fashion editorial that will run in all 26 international editions of the magazine at the same time. This high-profile creative initiative with Carine is among my favorite rule-breakers of 2012 and paves the way for more global content sharing.

Benchmarking industry leadership took a number of creative forms at Hearst in 2012:

• We created the Hearst Design Group by consolidating the editorial staffs of ELLE DECOR, House Beautiful and Veranda under Newell Turner’s leadership, bringing a streamlined, nimble, European publishing model to the U.S.

• Again, in the spirit of not holding onto established orthodoxies, we changed the business models of some titles, including Woman’s Day and Veranda, shifts that have dramatically improved bottom-line performance.

• You will see more brand extensions this year based on last year’s success; Cosmopolitan for Latinas, Delish and ELLE Accessories will all increase their frequency in 2013.

• From its genesis as a column in Good Housekeeping, 7 Years Younger is now a book and a website with extensive social media presence—and the launch has been a collaborative effort across our company.

Always looking for new ways to connect with our readers, Hearst developed fresh, effective commerce initiatives last year, including ShopBAZAAR.com and the House Beautiful Marketplace, a partnership with HSN.

After a year of close collaboration, the Cosmopolitan Collection debuted in September in 700 jcpenney stores nationwide. At year’s end, consumer sales were running more than $1 million per week. (Operating as entrepreneurs entails taking chances: Our 2011 partnerships CLAD and Gifting Grace were discontinued. There will be some swings and some misses—we learn and move forward.)

As you know, Hearst is the largest publisher of monthly magazines around the world, with 284 of our 304 editions outside the U.S. I’m pleased to report that in 2012 our international business grew by more than 50 percent. European shortfalls resulting from the ongoing turbulence in the economy were offset by the strength of earnings from our businesses in Russia and Asia—China, in particular, where ELLE has seen so much success that it moved to a semi-monthly publishing schedule.

Our other lines of business also made bold inroads in new areas. Hearst Integrated Media had its biggest year ever in 2012, selling more than 30 custom programs.

We welcomed new leaders, in the U.S., the U.K. and Latin America, to boost iCrossing’s digital marketing leadership. In 2012, iCrossing won two out of every three pitches and signed 30 new accounts—with its average deal size now 250 percent larger than two years ago. iCrossing’s fourth quarter revenues were the highest in its history.

CDS Global celebrated its 40th anniversary in 2012 and successfully focused on transforming its technology to offer new digital and e-commerce services and diversify its business across industries. CDS Global is a key part of the magazine industry’s tablet media infrastructure and at the same time is building business beyond media—it ended 2012 with nearly 20 percent of its revenue from non-magazine clients.

One thing that’s distinctive about Hearst is how important partnerships are to driving our growth, a key strategy established long ago by our CEO, Frank A. Bennack, Jr. We’re fortunate to operate joint ventures with many of the world’s leading corporations. (These ventures not only generate earnings, but also bring great talent—our just-named Hearst president, Steve Swartz, originally came to the company via a joint venture with Dow Jones). Because of our reputation of being such a good partner, we regularly receive inbound concepts from media companies looking to jointly create new products with Hearst. (So don’t be surprised if we test yet another new magazine by year’s end!)

Finally, a sad note and a heartfelt tribute: Helen Gurley Brown, the Hearst magazine editor who first made Cosmopolitan famous and single women proud to be smart and sexy, died on August 13 at the age of 90. She led Cosmo for more than three decades, leaving an indelible, personal imprint on several generations of women—and their men. Helen’s re-creation of Cosmopolitan produced profits that were quickly reinvested into a diversified set of businesses that helped build the modern Hearst Corporation.

Which brings me to 2013: Every member of the team has the chance to make a Helen Gurley Brown–level contribution, one that can have a long-lasting, positive impact on our company and colleagues.

Many are hard at work on achieving exactly that.

Esquire Editor in Chief David Granger and Publishing Director Jack Essig will soon announce a bold new partnership — an initiative that will dramatically expand the Esquire franchise. The brand also has big plans in the works to celebrate its 80th anniversary this year.

Our consumer marketing colleagues are collectively rethinking how we bring our titles to market by striking new partnerships with retailers—as they cast aside the “same old way” of doing business—and building world-class digital marketing capabilities.

The company’s digital leadership team is working on plans to “future-proof” our digital business models for a world where more than 50 percent of our traffic will be on small screens, and our readers will demand fresh, high-quality content from our brands around the clock.

The team at Hearst Magazines International is readying another dozen launches in 2013, from France to Australia.

And there’s so much more.

I’m also pleased to announce that in 2013 we will put greater emphasis on the training and development of our team. In the last few weeks we’ve had the good fortune to welcome to Hearst Tower inspirational executives like Facebook COO Sheryl Sandberg and HSN CEO Mindy Grossman to talk about how they are managing change at their companies. In 2013, we will significantly step up these programs and our exposure to some of the business world’s smartest minds. We will also invest more in digital training of all kinds.

Regardless of the headlines, change in GDP or cyclical trends, our teams are pushing ahead to create a successful 2013. This is the spirit that has put Hearst at the forefront of the industry.

Like you, I get a lot of e-mail newsletters. A few months ago, one contained an especially insightful passage that succinctly sums up the opportunities for our company and industry:

If one thing is clear, it’s that over the next 20 years the shortest distance from A to B is going to be anything but a straight line. To survive, much less to thrive, will require being both clever and smart. Clever means a willingness to try new things—be scrappy and make bold bets, even if they may not pay off. Smart means keeping your eyes on the year-2032 prize—be ready to cut off the experiments that aren’t working and cultivate your willingness to let go of the legacy as the time comes.

I am so proud of all the talented and smart men and women at Hearst who work to empower, educate and encourage our readers, advertisers and partners. In picas and pixels, you are simply the best, through all kinds of weather. And I know you are not alone—supported by family and friends who encourage you to do your best work and reach for the stars.

Thank you, again. I wish you a new year filled with personal and professional success and happiness.

Sincerely,

David Carey
President
Hearst Magazines

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