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[upbeat music] The music industry definitely went in first, but then somehow came out the other side. The biggest growth industry, I think, in the country is live events, live experiences.

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Not only Taylor Swift aside, but other music festivals. And so I'm gonna be optimistic, but at the same time, in the Hearst world, the best owner of media assets is a company that has a lot of non-media assets as well.

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[upbeat music] Welcome to the Rebooting show.

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I'm Brian Morrissey. Each week, I speak to those running media businesses to understand the path forward for a sustainable, equitable, and resilient media ecosystem. This week's episode is sponsored by Permutive.

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As the open marketplace collapses, publishers are offsetting these losses with direct sold programmatic by unlocking seventy percent of consumers that brands can't reach in the open marketplace today.

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Publishers' CROs must recognize that they have to take control and keep one hundred percent of their revenue. As data owners, publishers are the next generation of digital advertising, not third-party ad tech.

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Permutive's privacy-forward audience platform helps publishers build audiences and develop insights to win more RFPs and build deeper relationships with advertisers based on data. Learn more at permutive.com.

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That is P-E-R-M-U-T-I-V-E dot com. Thanks so much to Robert, Joe, and the team at Permutive for their support. Now on to the show.

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This week's conversation is with David Carey, a longtime media executive, who over the years was the founding publisher of Smart Money, group president at Conde Nast for many years, and president of Hearst Magazines from two thousand and ten to two thousand and eighteen.

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He left for a year at Harvard before returning to Hearst in a new role as senior vice president of Public Affairs and Communications.

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In this role, David oversees corporate communications as well as sustainability, diversity, equity, and inclusion, and corporate citizenship reporting.

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I enjoyed this conversation with David because he deeply understands the media business, not just what it was, but also what it has become.

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We spoke a lot about how Hearst and other legacy media companies outlasted their supposed digital pure-play replacements and how the shape of the media business has shifted, as Hearst has interest in everything from data to logistics.

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One of my working theories of the future of media is that its future is smaller and often more as an adjunct to other, more lucrative businesses. If you like this show, please leave it a rating and review.

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And also, please send me your feedback. I'm Brian at therebooting.com. [upbeat music] I've been resting all weekend for this, David.

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Who would have thought that being a modern business journalist, you're a talk show host and everything in between, right? So- Well, well, that's actually part of media these days- Yeah...

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because you gotta be diversified. And so, uh, you know, being able to convene people is incredibly important and depending on the sector you're in. And just, just being in one place doesn't serve you well in media.

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So that's what I wanna, like, really talk to you about because, you know, Hearst obviously was originally, I don't know, or-the original diversified media company.

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But I think when I was having all these conversations in Cannes, you know, last week, you know, you know, people are not gonna get too in-depth, right?

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Like, they're, they're just gonna be like, "Well, we're focused on diversifying our revenue." I'm like, "Oh, wow, imagine that. [laughs] It's like twenty twenty-three." But let's just go back.

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I actually remember, we actually had lunch one time at Hearst, and I think it was two thousand and sixteen. I should've, I should've gone back and Instagrammed 'cause they took the photo of one of the oil paintings.

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And I remember asking you about BuzzFeed, and I remember asking you, like, "Are they building, like, a real brand? Like, are you, are you, are you seeing them as building a real brand?"

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And you were like, "Yeah, they mean something to a, a big group of people."

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And I think at that, at that era, BuzzFeed and a lot of the others of its type were getting a lot of focus and attention and were basically being presumed to be the successors of a lot of the brands and companies like Hearst.

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So when you're looking back, you, you've been in media a long time, what went wrong in that era for the digital pure-plays?

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Well, if you would have asked me then or even a couple years later to try to predict today, what is today? The New York Times, which had to, remember, get that crazy loan from Carlos Slim- Yeah...

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for, like, eighteen percent, and people- Yeah. They were, like, in hock to this Mexican cement billionaire or something.

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[laughs] So people were wondering, could the family-owned Sulzbergers keep The New York Times going? Uh, Refinery29 was gonna be the Conde Nast killer. Uh, Vice was gonna conquer all media, BuzzFeed.

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And you fast-forward today, you know, Vice is bankrupt. Refinery29, wherever the remains of that live. Uh, BuzzFeed is potentially delisted, of course, for its stock trading below a dollar.

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And the Times is ascendant in every way.

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And so I think there's a lot of important lessons, and I think that something that certainly, you know, benefits Hearst but benefits others is, you know, the end of the shiny, new object.

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And I think that there's a lot of chasing to whatever the, the, 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.

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And so I, I do think, and I, what I, I envy your position and the content you create in terms of Rebooting 'cause it's kind of chaos in all directions for all media forms, which is probably great for being a journalist.

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A little harder to be an operator at different times. But I think it very much favors companies with real strategies, deep roots.

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I, I, I, I used this, uh, uh, a couple years ago in a, in a, a speech, but remember, uh, the first Toy Story where you had the, the very confident, uh, Buzz and the very kind of conservative WoodyAnd Buzz says, "I'm gonna fly."

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Woody says, "That's not flying, that's falling with style." And I think that defines a lot of the organizations, the falling with style. Uh- Yeah...

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I remember, I remember going to, uh, one year, and I went to a Refinery29 event, and it was fantastic. It was so lavish. Yeah. It was not- Uh-oh, it's lavish. See, that's a mistake.

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As a journalist, I always tell people, "Never have a lavish party because if things do go south, that is gonna be the anecdotal lead for this, the, the autopsy story about what went wrong." Excess.

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Tina Brown, Tina Brown and Ron Galotti cemented- There you go... that of course with Talk, uh, it's a party at the Statue of Liberty in whatever year that was. Yeah.

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And I remember I was running a business with, you know, 10,000 employees and three billion dollars of revenue, I never would've put on and green lit a, an event like that. Yeah. So falling, they were falling with style.

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We thought they were flying, they were falling with style.

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A- and now, you know, in a, in a tougher economic period, a moment of transition in, in so many ways, it, it's becoming clear in terms of who had real businesses built on foundations and who was just trying desperately to get sold and take their money as quick as they could.

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Yeah.

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But I mean, the sheer number, like, you know, it, it, of, of them and, and the difficulties that just about every single one has run into of, of various types, you know, some more severe than others, it says that it's more than just execution, that there were some sort of thematic and structural problems with a lot of these models.

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Uh, well, the potentially, what were they focused on? Were they focused on ginning up investors, right? That's probably the vice story, right? Uh, but were they focused on the people who would matter most?

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You know, were they focused on their audience? If it was a B2B product, were they focused on their marketing partners? I'm not so sure.

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But they found a game that they could kind of skate across and get attention, have media cover them. But, uh, and you see it today with, uh, with the latest launches.

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You see, I have a lot of people mention Puck to me and what they see. Almost no one mentions Semaphore to me, right? Mm-hmm. Uh, there's a lot of focus on Little Messenger and how much...

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So media is much harder to operate than it is to from the outside looking in, sustainable media. Yeah. And, and that's al- that's always been true.

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It's an easy to, to make a splash and make some noise, but, but even the latest upstarts are finding it's really hard to build a sustainable business that engages- Y-... people on a regular basis.

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And that's where companies like Hearst- Yeah... but also CUNY Now, but also the legacy players, they've kind of been through a lot. And so hopefully it's a moment that, you know, those values get a chance to real shine.

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Yeah. And certainly more resilient models, right? So but I, I feel like we're between eras, right?

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Like, because at the time when, when we had that lunch, like there was the, the palpable feeling that this was the next era, right?

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That like, you know, that going by the oil painting and stuff was the old era [chuckles] and then this is the new era. But the new era didn't happen.

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And so I think the, the, you know, the companies that had these solid bases obviously had more resilient models, uh, built up over the years. They were already more diversified than these, these other businesses and...

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But I wonder, like, do you feel like we're between eras right now? Because I'm not sure if we're gonna go back necessarily.

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Maybe, but it's- Yeah, you know, so the, people always forget, you know, look, it's not a recession now, but it feels like it, certainly in some areas. It is in advertising. I'm sorry. It is, it is in- At Cannes...

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it is in- Outside of the excesses of Cannes, like [chuckles] It is in adverti- it is in advertising recessions as independent of what, you know, what, uh, GDP does.

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And, and people forget that, you know, when businesses in recessions, they're, they're not much fun, but they don't last forever. They do provide an important kind of cleansing effect, right?

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You and I have lived through- Yeah... a bunch of them, it's like.

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And so, uh, you can look back on recessions and see some of the, the silver linings of excesses and things like that that got worked out of the system, and this has been the case going back to like the 1800s, right?

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Whatever, whatever the case. And so, uh, but the advertising business always emerges differently from a recession than it went into it, always. Uh, and so, you know, I think everyone is trying to figure what that means.

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What happened in, of course, the Great Recession, the deep declines in 2008, you know, something like three billion iOS devices were sold from when the recession started to when advertising spend recovered, and all of a sudden the mobile market became a real market, right, in a way that it was not before.

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Mm-hmm.

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And so I think this period of time, and your point about this, this inflection point, all we know is what emerges on the other side when ad growth resumes, it's not gonna look like, you know, the month before it started to decline.

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It's gonna look different, it always has. And so what does that mean? You know, I think you ha- you see, of course, the discussion of Canon in the news every day is, you know, will AI lift humanity or destroy it?

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And I don't think people know. Yeah.

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What it will do, what it will do potentially is enable yet another generation of fly-by-night publishers to produce content to try to get programmatic advertising kind of diluting the market.

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Will that be an opportunity for brands that matter, uh, that are not just some sort of made-up review site? Hopefully. And so I think all of these things are right in the middle.

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And in this time, unlike other media, it feels like all of media, maybe with the only exception of music, is now part of it.

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Music, if you- you've seen those charts of the music industry over time and how their revenue kept getting reinvented. Used to be vinyl records.

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Those went into decline when CDs came out, and then that started going decline in, in a deep decline in the early days of Napster and internet sharing, and then some revenue for per song, you know, early iTunes.

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And now the music industry is hugely recovered, almost back to the highs based on streaming.

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And so I, I, I always like that, that music industry, uh, kind of chart over time 'cause they have somehow reinvented themselves, obviously aided by technology. That's what all media forms are, are counting on.Yeah.

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So let's get into the Hearst model, right? Because I think a lot of people know, like Hearst for its media assets, but Hearst is a much larger company. There's a lot of different assets in, in Hearst.

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I mean, I don't know, I'm not sure if many, uh, [chuckles] of my listeners know about Hearst Trucking, but, like, you know, there's a lot of different aspects of the business.

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Explain a little bit how these parts work together, right? 'Cause I wanna get into the media assets too, but also the B2B assets and, and how... Because everyone wants to diversify, right?

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And I-I've had, you know, Joe Marchese, who was on this podcast, I think, last year, and he was talking about media's, like, great for getting attention, great for influence.

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It's like, doesn't monetize great [chuckles] compared to that. Like, you know, it's usually a best to be a front for other businesses. But how do all these businesses work together- Yeah... with Hearst? Yeah.

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And, and it's a story that I, we're, I'm very proud to, to tell. And, and Hearst, we'll call it roughly fifty-fifty between business information and consumer media.

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It, it's, every year it's, uh, becomes a little bit more tilted towards, towards, uh, business information. But the, the roots are deep. And so, but, you know, the, first of all, Hearst has been at this for thirty years.

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Uh, it requires a dexterity of leadership. It requires, you know, really having a fundamental understanding of what diversification brings.

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So if you go back, interesting moments in Hearst history, without going into too much detail, you know, for us, what was an important moment?

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Well, uh, in nineteen sixty-three, the great Helen Gurley Brown wrote a book called Sex and the Single Girl- Mm-hmm... that became this cultural phenomenon.

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Helen became a in-demand talk show, you know, evening talk show person. And, and Helen had this idea of creating a magazine called Femme, which was like Sex and the Single Girl as a monthly magazine.

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And she came and pitched the then president of, of Hearst Magazines this idea, who said, "Well, we don't wanna launch Femme, but we have this kind of mid-market, middle-brow magazine, Cosmopolitan.

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You can remake it as you see fit." So talk about business model risk. They gave someone who had never been a magazine editor one of their businesses.

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If you go back and look at the last issue of Cosmo pre Helen Gurley Brown and the first issue after, you've never seen a more dramatic product shift in your life.

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And, and Cosmo, of course, caught the wave at the perfect moment in terms of the women's liberation movement, the arrival of birth control pills, rising college attendance, all these things that were happening.

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So Cosmo became this huge engine. In the nineteen seventies, I, I haven't fact-checked this, but someone told me Cosmo was more than sixty percent of the profits of the entire corporation.

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And so the c-- it was like Cosmo and some newspapers. And then, uh, Frank Bennack, our then CEO, saw the opportunities in cable, partnered with Cap Cities, a fifty-fifty deal around A&E.

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What we brought was we brought knowledge of the women's market. A&E brought, uh, the broadcasting skills. And so-- And A&E lost money for seven years, and largely the profits from Cosmo helped fund that.

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And then, uh, without dropping too many initials, KKR buys RJR Nabisco. RJR Nabisco happens to own twenty percent- That was Barbarians at the Gate, right? Barbarians at the Gate. Owns twenty percent of ESPN.

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You know, it was a very leveraged buyout. At ESPN, their stake was considered a, uh, non-strategic asset. Uh, they call Cap Cities and say, "We wanna sell our twenty percent."

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Cap Cities had approval rights, and they say, "We want you to sell it to our partners at Hearst. We've been through thick and thin on A&E, and we trust them."

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[gentle music] So we had a chance to buy twenty percent of ESPN in the nineteen eighties.

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I think the reported price was, like, a hundred and eighty million dollars. And- Mm...

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ba-based on the nature of that partnership early on, which was severely tested, all the cable businesses, which are now ginormous, but they, they didn't have, you know, uh, they had, uh, years of investment and, and some bumps along the way.

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So those businesses, of course, grew up and become, you know, big businesses, and that helped fund investments.

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We-- Fitch Ratings is our biggest business, but we also owned Motor Magazine, William Randolph Hearst created it over a hundred years ago, that evolved, uh, into a magazine for people who repair cars that then re-evolved into a data business.

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So if you get into a fender bender, if you go to a auto body shop, the software likely that's used to give you the estimate, Brian, of three hours of this and how much is likely to be Hearst software.

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We had a magazine called Diversions for physicians that ultimately evolved into a database of drug interactions sold to hospitals.

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And so often these early businesses, they were kind of our, you know, beach, uh, and land, you know, land and expand. We then started to make acquisitions beyond that.

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So our transportation business, now we've, we've invested many billions of dollars. But all off to that or-original premise of Motor Magazine became a data business- Mm-hmm...

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that then enabled, uh, investments in something called CAMP Systems, which monitors the health and well-being of engines on private aircraft as well as helicopters.

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Now, uh, is also we bought a business from Boeing called IO that helps people looking for spare parts for private aircraft.

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And we just bought a business in the trucking business called Noregon that helps-- There are forty million lines of code that operate the computers on the semis that from Amazon and others that bring you your, your goods that you order online.

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Mm-hmm. And it's very complicated to repair, so we purchased that business. So keeping things functioning and healthy is kind of the, the secret of those data businesses. So- Yeah... we, we consider that content.

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When the people at Fitch Ratings are doing an analysis or writing an opinion of whether the local municipality will pay back the debt-That's content. And so we- Yeah...

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fortunately, first by Frank Bennack, and then by Steve Swartz, who's been CEO for 10 years, uh, this month he marks his 10-year anniversary.

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The company's had a very broad view of what content is, and, and boy d- is that, uh, to the benefit of everyone who works here.

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Yeah, because I mean, not all content is made equally, and some of it is way more profitable [laughs] than...

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That type of content is typically way more profitable than the kind of content of put it against the page, and put an ad next to it, and also some subscription and, and maybe some commerce revenue.

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So h- here's an obvious but, uh, question: why have the media assets at all? I mean, these, these other assets are growing way faster.

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I think your revenue is up, like, 22%, and as you said, like, you know, the percentage going into, you know, these other types of content assets is, is, is probably gonna only grow, uh, larger.

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I mean, I don't know if cable is under the most stress that it's been in any time. Local newspapers, maybe they bottomed out, but, like, I don't think a lot of people are thinking of them as growth industries.

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Magazines have been through the wringer, and, like, there's still a ton of value in these brands. At the same time, like, I, it's hard for me to believe that their future is larger, as, as larger than it is now.

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Uh, it likely is smaller. So, so why even have media as part of Hearst? Obviously, it's called Hearst [laughs], so I assume that's part of it. Well, there's a b- there's a, a, even a better version, so a better reason.

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So, so if you go back to, i- uh, so, so J- Jeff Bewkes, uh, ejected Time Inc. from the Time Warner portfolio because I think Time Inc.

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at the time may have had, like, a 20% profit margin, which is pretty good, and the rest of the company had, like, a 35%. So getting Time Inc. out of it would, would give more value to the remaining, uh, Time Warner.

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Yeah. But, you know, private companies don't have to think like that. First of all, these businesses still make money, okay? S- some of them still make a lot of money. So l- let's be clear. Mm-hmm.

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T- two is that certainly as a c- as, as it relates to our local television and our, uh, newspaper business, we really believe in the public service role of local journalism.

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We absolutely believe that, you know, local journalism is, uh, often the foundation of our democracy. We take that very seriously.

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Our newsrooms and our newspaper groups are basically the same size as they were five years ago.

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And you've seen other public companies and PE players kind of abandon a lot of the newspaper business, hoping to improve in it for a quick exit.

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We take these businesses really seriously, and we think it's important for us to operate.

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Everyone is also very mindful that it was the media businesses that provided the capital that allowed everything else in the company to happen. Uh, we like the magazine business.

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You know, parts of the magazine have, businesses have a lot of stress, others have less stress.

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But we like the business, and we believe that its, its future, while different than its past, but to, you know, these brands, you know, stand tall. Mm-hmm. So why are we in it? A, they're good businesses, okay?

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Maybe some were better businesses X years ago, but they are all very profitable today.

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And two is we do believe that we have a, a moral compass, certainly when it comes to our local media businesses, is to operate them well.

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And so again, when you're a private organization, you can take a long-term point of view about your future as well as be mindful of your history. And so therefore, you know, we are a buy and own for a long time.

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Just as an interesting example, so we just published- Yeah... our first sustainability report.

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And when you were on our floor having lunch, uh, you, uh, might have seen a photograph of Senator George Hearst, who was William Randolph Hearst's father.

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And, uh, Senator Hearst, uh, got very wealthy as a silver miner, and as wealthy people did then but also now, is they buy land. He ultimately bought 200,000 acres of land in California.

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Oh, I thought you were gonna say he bought media. I was like, that's what they do now. Well, first he bought land before his son started- Okay, land, then media...

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his m- his son started the media business, but he bought land- Okay... and became one of the largest landowners in the state of California. If you ever been to Hearst Castle, the company- Yeah...

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donated the castle, the hilltop, to the state of California in the late 1950s. But all the land as far as you can see is still owned by the corporation. It's 18 miles of coastline and 12 miles in.

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So on the original land, uh, acquired by, by Senator Hearst in 1860, we have 20 million trees.

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And as we're now talking about our sustainability strategy and this concept of, quote-unquote, "carbon sequestration," that owning a forest is actually a great thing. It's the most natural offset you can possibly have.

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So it's, it's a funny thing that, uh, land acquired 160 years ago will now be central to our sustainability strategies going forward. Okay. That's- So it all works together basically [laughs].

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Well, that's, that's the most extreme version, potentially, of a long-term point of view. But I think, you know, we just, we just acquired a TV station in Florida. I think we're looking strategically to expand.

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We, as you know, uh, three years ago we acquired Bring a Trailer, tucked in next to Road & Track and Car and Driver, uh, as a great marketplace product.

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And so, you know, through organic investment but also through acquisitions, there's ways to only- Yeah...

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further the, the imprint of the- So you s- you, you can still see, like, acquisitions in, like, media more than tuck-ins. Like, I mean, no more Rodales, I assume.

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I don't even know if there are any of those to be had anymore. You know, it'd have to, it'd have to be... Rodale was really synergistic. I, I drove that deal. Yeah.

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So I, I think deals that really can be folded in and, and often get a big pop- Right... in the, in the profitability 'cause of the, the synergies.

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So, uh, they're not out of the question, although in the last, you know, 10 years, 90% of... We've done more than $10 billion of acquisitions, you know, maybe 10% have been in consumer media.

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The, the investment focus is outside of consumer media, but we have made investments in consumer media, for sure.

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Okay, so but let, let's just stick with the media assets for a little bit, and give me the optimistic take, like, on let's just start with magazines. Okay. I mean, 'cause you are-You're a magazine guy, right?

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[chuckles] Like, I mean, you're, you're the publisher of The New Yorker, you were at Conde Nast for many years. You, you ran Her-Hearst Magazines. So I'm sure it's at- an issue near and dear to your heart.

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And, like, I'm not gonna ask about the print. The print, print has a role. It depends on the, on the category and all that stuff like this. But, but what is, what is the optimistic future for these magazine brands? Yeah.

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So ma-magazine brands have always punched way above their weight, and this is true forever. My first job was at Esquire Magazine in 1985.

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And I came to New York from California, and I was going for my interview, and I thought there would be, like, a building with Esquire on the top, you know- [chuckles]... that it would be a building full of people.

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And little did I know it was a floor and a half of two Park Avenue, period. Okay? So that was the nature of magazine brands being better known. You know, there-there's a Barbarian- Yeah...

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there's a Barbarian factory in c- you know, New Jersey, I can see from my office, that probably has more revenues than Vogue. Uh- [chuckles] Exactly...

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but, um, but they're not-- they don't have the same level of attention, of course. So that-that's been- Mm... forever. Even, again, my f- start of my career 30, 35 years ago.

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I think magazine businesses end up or evolve to v- a similar place as the fashion industry. The fashion industry is always known about how to kind of there's a pyramid of how to tier their audience.

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If you've been to a fashion show, if you go to a Ralph Lauren Purple Label show, or if you're in Europe and you go to a Chanel show, you know, what they send down the runway is, uh, both important, but not their biggest business.

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What happens at Chanel at a couture show, you know, that business is relatively small. But it sets the stage for everything below that. It's the eyewear, the handbags, the accessories.

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Ultimately, they make their money from selling, uh, beauty products at Bloomingdale's and, and Saks Fifth Avenue.

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And I think you're starting to see that happen with magazines as well, that they have an opportunity really to become, you know, multi-tiered businesses. And so the print piece becomes the standard-bearer.

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For some, it'll be the business, and some it'll be, you know, more of a like a, a high fashion, uh, show.

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The-- what's happening across in terms experiential, all the digital businesses, the data, uh, businesses that they'll be able to create. You know, I love, you know, Good Housekeeping is a good example. Hmm.

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The business is almost a hundred and forty years old, almost the same age as... I think Good Housekeeping is like one thirty-eight, and Hearst is one thirty-six.

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Uh, and so, but, you know, Good Housekeeping, because of the Good Housekeeping seal, which everyone knows as a, as a phrase in the vernacular.

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And you often find now twenty-three-year-old men, a guy who is doing a, reading product reviews, looking for something, and that Good Housekeeping review will carry more weight than Tom's review or made-up review.

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And while, while that young man may not be a natural reader of Good Housekeeping the magazine, when it comes to e-commerce reviews, all of a sudden that history, all, all of, you know, that, that relevance comes to bear.

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So I, I think that there'll be more opportunities, uh, for these businesses.

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[upbeat music] I mean, commerce in particular, I mean, with Good Housekeeping, it's a great fit for commerce, right?

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I mean, it's, it's made for people making decisions. It's like, I guess they call it now intent-based media.

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And I was l- I-- when I was in Cannes, I was doing, uh, I did an interview with, with Neil Vogel, and we talked, which is sort of remarkable when we think about, like, About.com, which is basically, you know, what Dotdash became, acquiring the Time Inc.

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assets, which is basically what Meredith was at that point, you know- Yeah... in addition. But, like, that's like, it's really telling about where the media, the business has gone.

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I think one of the things I wonder with a lot of magazine brands is there's definitely a role for, for commerce in them.

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I think some, some brands have been like sort of, sort of sent off to the SEO glue factory [chuckles] Yeah. Yeah. That's, that's a good example.

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Yeah, they, they, they, they're jerry-rigging the plumbing, but they're not really doing- [chuckles]... the real business anymore, and I think that's the downside of intent-based, right?

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You gotta- Yeah I, I'm hoping that Good Housekeeping, I don't, I don't know what an example would be so far afield, but they're not doing, I don't know, whatever it's gonna be.

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They're not doing javelin, uh, throws or whatever- Yeah [chuckles]... you know? So. Yeah. Okay, so, so you also have a lot of, of local TV assets. Yeah.

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And look, local TV is, like, held up and, like, a new election is coming. That's always a good [chuckles] thing for local TV. You get wall to wall Trump, Biden, RFK, whoever else gets in the fray, it'll be great.

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It's a nice stimulus package that comes around every few years. But local TV- Every, every, every two years, by the way. So- Every two years. Yeah. Well, yes, that's true.

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And, and our, our elections go, you know, for, for long periods of time, unlike here in Europe, and they don't do this at all. They just do like six weeks, and then, then they're done with it.

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But we've got money to m- to be made. Explain to me the sort of resilience that you see there because, you know, local TV is also...

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I feel like a lot of, a lot of media is, is, is under more strain than it's been in a while and, and I think local TV is, is in one of those areas. But give me...

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'Cause you guys just, you just bought, bought a station down in like Fort Myers, Naples, right? Yeah. Yeah. And I mean, big growth area.

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I know my parents have, are in a retirement community there, and I've just seen over the years, I mean, that place has like exploded over on the West Coast of Florida.

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Yeah, local advertising I think has been more resilient than national advertising.

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National advertising, national advertisers have a million options, and of course, some of the large, uh, tech players have an advantage in terms of some of their data.

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Uh, to have a strong local TV station that's number one and number two in evening news and suchCan really be a, a real plus.

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And so whenever we look at the trends for national versus local, o-often in our markets, the local is holding up fine. What do you see at the local advertising? You see a lot of hospitals. There's a whole category.

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You see this when you come back to New York and you drive on the West Side Highway. Mm-hmm. How many ads for hospitals do you see? From every hospital, right?

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And they often, uh, there's a lot of marketing, uh, uh, uh, of hospitals on local television. Um, all the betting sites have been spending a great deal on local, local as well.

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So local advertising feels a better place than national advertising by and large, and, uh, you know, when you live in a community, you forget, like, the markets that we own, WCVB in Boston's our biggest market, but mostly, you know, the largest markets are kept ONOs, kept by the networks.

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You know, if you live in Birmingham, Alabama, you live in Sacramento, your local TV station is pretty important to keep you up to date on what's happening in your community.

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And so, uh, so the, the case for local and then every other year, you know, is there a Senate race or whatever, but the one thing that's been true in our divided world is that what it takes to run for office, people spend more and more, and that benefits lots of media options, but really benefits local television as well.

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Yeah. I always like... It's, it's funny when I read a lot of, like, writing about, like, the influence of, like, money on our politics, et cetera.

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I'm always, like, reading them like, "Yes," but, like, it is, like, a lot of that money does get r- uh, like, cycled into media because a lot of particularly local news is not as lucrative as... I mean, when you...

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During... When you put on local TV during an election and it's, like, wall to wall, if you're in, like... At least when... I, I was living in Florida during the last election. Yeah.

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And so since it was at least thought of at that time as, like, a battleground state, it was, it was bonkers. And then going back to Pennsylvania where my family's from- Yeah... was completely insane.

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But- Hey, l-listen, the Supreme Court liberal, you know, liberalized the laws under Citizens United. It was... So that, that has clearly been, you know, a, uh, a, uh, uh...

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Local television has been a beneficiary of that. Yeah. So- Yeah... it is. Yeah. But how about local news? Explain the commitment there because I think of all of...

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I, I say, like, all media is hard, but, like, local news is the hardest of the hard, uh, and particularly in newspapers. It, it's just...

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It's an, like, an unrelenting, like, drumbeat [chuckles] of bad news on the local level. Ex-explain sort of h-how Hearst thinks that it can, like, actually make this truly sustainable and, like, at a, at a scale.

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Like, I mean, we see a lot of, like, interesting experiments, uh, of local.

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I think a lot of people have written off, like, the big chains for having figured this out just because of the history of, of, of, of how a lot of those companies have, have operated their assets. Yeah.

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So when I was, uh, driving, uh, back to my home last night, I listened to the, uh, uh, David Remnick interview of A.G.

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Sulzberger on the New Yorker podcast based on his, uh, his piece which I have yet to read in the Columbia Journalism Review around the essential nature of journalism. Yeah. And so I, I... You know,

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i-in terms of who's paying the highest, uh, direct price for content, uh, it is subscribers of local journalism. If you wanna subscribe to...

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It's true for The New York Times or The Wall Street Journal, also true for any local newspaper, that subscription prices have, are much more...

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Most local newspapers, uh, start to approximate 50/50 between, uh, consumer revenue and advertising revenue. And so, and they have a host of other kinda businesses that they do.

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So, you know, while we're looking at, you know, the very tough comps and the, the endless restructurings that come out of, you know, the other public newspaper chains, uh, you know, we have the Houston Chronicle and the San Francisco Chronicle.

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Those are fantastic properties. Those, those dominate their market. Certainly Houston does.

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We've been acquiring newspapers in Connecticut as well, kind of the Gold Coast, if you will, and achieving some synergies in terms of, like, distribution that other often are hard to get, um, in the newspaper business.

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So- Mm-hmm... I would say that, you know, the degree of difficulty is there for our newspapers, but not to the same as it is for others. The, the... Actually, the profits have held up pretty consistent.

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Again, newsroom sizes are the same as they were five years ago. We've done some tuck-in acquisitions where we can.

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And so it seems like they got a clear head on their shoulders as they're kind of working through many of these issues.

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But again, at, at Hearst, people, the businesses have a chance to access capital from the center to make investments.

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It has to have a business case, but, uh, that's, that's unique that, you know, where they need to make investments, they get funded. Yeah. And then let's talk about cable TV, right?

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I mean, 'cause y-you guys have, like, you know, ownership in, in, in... Still in, like, A-A&E, History, Lifetime- Yep... ESPN.

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You know, I feel like the cable bundle is one of those things that, like, you know, people have been saying, "Oh, it's under threat.

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It's under threat," for, like, the longest time, and then it just keeps going and going and going. But now it seems really under threat. Like, I mean, if, if ESPN goes direct to consumer, the entire consumer...

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The, the, the, the bundle sort of falls apart, uh, completely. Explain how you see cable TV evolving because it, it has had a very good model.

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I mean, for all of the talk about CNN, you would think this company was a complete disaster and not, like, making, quote-unquote, "only" $750 million. $750 million a year. Yes, exactly.

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I was like, oh, my God, if that's failing, let me fail. Yes. So we operate those businesses with The Walt Disney Company. I'm not close to those businesses. Yeah. You should, you should know. So- Mm...

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you know, we own half of the A&E with, uh, with Disney and 20% of ESPN. So I, I have four children. You know, probably one of them in the future ends up with a cable box in their home.

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Now all four of them are stealing my passwords or using my passwords with my permission, uh, to access certain content. But I, I think it's clearly this is, um...

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You know, you read the same numbers that I do about, you know, changes of household penetration, uh, of cable households.And so those businesses really are gonna be on the front lines of, of a big reinvention.

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It's gonna be a big deal for the whole sector. You see this in the share price of, uh, of, of Warner Brothers Discovery, right?

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So this sector's really kind of under the, the magnifying glass, and it feels like if you look at lessons from before, those that have really unique content that, you know, isn't, uh, easily interchanged with others will do better than those that do not.

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But, you know, if you ask me where it's gonna go ten years from now, I can't tell you. You just know- Yeah... obviously it's gonna be a lot different than today.

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Do you have like a macro, like, theory of the case about, like [laughs] what does come next in media? I've been, like, asking people this, like, I mean, I, I wonder whether...

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'Cause, like, there's so many different stresses on the system right now, some micro and some, like, macro, and some, like, really difficult to figure out, like AI.

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Like, I think anyone who tells you they know, like, how AI is gonna, like, affect the media industry is either making it up or delusional. Yeah. Well, I'll, I'll, I'll give you the upside case.

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So w- let's go back twenty years ago and how people consumed media, right? So I used to get out of bed, uh, get on the train, read my physical copies of the New York Post. Hey, yeah.

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I started there to make sure that Keith Kelly was-- thought I still had a job, and then I would read the Times or the Journal, where I'd finish- Oh... on the way home.

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Did-- Were you able to do that origami folding thing? Like, remember those guys who were able to, like, in a crowded train be able to fold it- Yeah, yeah... in many different ways and- That was a wonderful skill.

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You know, I commute via- It's gone. Everything's been taken away from you... v- via, yeah, via Metro North. Oh, okay. There you go.

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Um, and so which you get a little bit more elbow room in terms of reading, but I used to be... And I used to have a cup of coffee and used to read.

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And then, um, you don't interact with much media during the day, and then you go home at night, and you watch whatever you're going to watch on one of the five networks or cable set.

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So that was the case then, and boy, does that seem quaint and easy to, to manage as an operator.

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The plus side is now people start consuming media as soon as they grab their phone from their nightstand and they see kind of the latest news, whatever your first go-to is.

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And then, uh, on the way to work, you'll listen to a podcast. So you'll hear, you know, a journalist that you like or, uh, a s-sets of journalists or this conversation. Then you get to the...

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You get to work and, you know, when you go home or let's say, not you, Brian, but a normal- Mm-hmm... a normal person goes home- [laughs]... and they look how many times they picked up their phone that day. Yeah.

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Is it one fifty? Is it one eighty? Is it two hundred? And people are bathed in media. They're watching television. Most people watch television with their mobile devices in hand.

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Uh, heavens forbid they miss something that, that, you know, is happening while they're absorbed for thirty minutes in their favorite show. So the media consumes, as you've seen the time spent per day, so much more.

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And so that-- we'll take that as a positive that there's- Is that a positive, though?

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Positive for, uh- I, I don't mean that as a positive in that, like, generally, like, when there's so much, like, media out there, the absolute cost for a particular piece of media ends up going down.

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I mean, we've seen, like, you know, it's like the iron rule of CPMs. They, uh, they go in one direction. Well, the o- more opportunities.

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So everyone, hopefully, uh, uh, has a few brands that become essential to who they are. So I, I can say I, I love the Wall Street Journal. I don't, you know, let's, let's take out the opinion pages.

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[gentle music] And whenever I meet a Journal executive, I tell 'em, "You should come up with a thousand dollar a year subscription and se-serve it to me," because I would pay that.

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It's that important to how I operate the world as an executive and so on. So I, I think that the opportunity is that for every brand which has...

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'Cause I think one of the challenges of media, and you point out in terms of... So every brand has these concentric circles of- Mm-hmm... diehard fans and next diehard fans and so on.

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And so, and the problem is there hasn't been effective price discrimination, uh, not as good in terms of what media needs to be.

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So you're in Cannes, and you had a choice to stay in a room facing the ocean or a room facing the parking lot. When you fly home, you have two or three classes of service, right?

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Almost everything else that people consume has a price tiering to it that media still needs to do a better job of. And so I think there needs to be, you know, for, uh, for these businesses, you have your diehard...

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Like, all the discussion now is about the Barbie film coming out. Yeah. I don't know if it was in Cannes, but it's, it's every place. I was reading about it today.

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No, near my apartment in New York, there's a whole, there's a Barbie world pop-up. Oh, let's, let's take another example. [laughs] Okay, so what did we see in terms of how people are willing to pay in terms of fans?

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So let's talk about the Taylor Swift economic impact, okay? Oh, yeah.

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So I went, uh, my daughter, uh, works in the music industry, and sh- on a Friday she got a, she got tickets, uh, to go to Philadelphia at the very last minute. So we drove down to Philadelphia.

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I got a hotel room at the Marriott. It was eleven hundred dollars. It was like going to CES or Cannes, okay? [laughs] I'm a m- I'm a premium Bonvoy person. I had to wait in line forty minutes to check in, okay?

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And so, and so if you are a Taylor Swift fan, while some can listen to songs, others, you know, came as whole groups. And I think that's true for media as well. And so I, I would say the optimistic case- Mm...

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is that media has a chance to have different prices based on, you know, the, not only a differentiated experience, but how either hardcore or not. I, I love, uh, Graydon Carter's Air Mail, Air Mail, uh, product.

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I like the fact that it comes at six AM on Saturday. I wake up on Saturdays, we'll call it seven or eight. It's my first read. It's something I depend on.

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I create habitSo I think there's still lots of opportunity in that space. Um Hmm.

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So give me the optimistic case then for media brands themselves i-in a world where, like, I can see this bifurcation taking place, like, I mean...

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And the individual brands, like in Cannes, like the creators were there, and everyone was talking about creators this and creators that.

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And, you know, I think a lot of the, the creator, the creators are gonna be under a ton of pressure because, because of TikTok, because the rise of TikTok, and you see what TikTok is, it's not a follower model, it's not a connection model, it's a shovel the raw content ore into the AI smelter and, like, [laughs] cross your fingers model.

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I like that. And it works- Yeah. And it works for them, but that means that's gonna make, like, creators really difficult.

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I even had, like, one conversation that I, I don't think the person had had anything to drink either, and they were talking about AI, like, disrupting creators too by, you know, AI creators happening.

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Because they're, they're gonna train the models, like, on the creators, and then create just slightly different, like, versions of, of the, of the creators.

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But give me the case for a, a, these institutional media brands.

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We're obviously in this period where I feel like the pendulum is, has, has shifted maybe too much, maybe it still has, has some ways to go towards individuals versus institutions.

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You, you mentioned podcasts, you know, look at podcasting. It's very driven by a, a personal connection. I think newsletters is one of the areas of growth very driven by like, you know, personality.

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Talk and Semafor, you know, they both put the, the, the, the individual a little bit at the forefront. But give me the case for institutional brands.

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Like ours i-in terms of- Well, yeah, just in general, not like necessarily just like the Hearst brands that have, like, this long history, but that, that the purpose of a, a brand, like take AirMail or something like this, that over time that that is going to have more value than the kinds of intense connectivity, and sometimes even in a parasocial aspect, that we see to individuals.

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And it's, it's most obvious in the creator economy, but I think it's happening across l-lots of areas of media. Yeah.

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So, you know, I, I didn't see the details of it, but I think AirMail just started a, it was about pricing, like three hundred dollars a year, and I get invited to some events and so on.

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So as they're looking for kinda their true believers.

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So, hey, listen, uh, you know, the, one of the challenges of media is that sometimes there are too many, uh, too many, uh, brands in a space, and some of that's gonna thin out.

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It's been, it's been, it's been going on like that for some time.

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And so, you know, the brands that are well differentiated, that there's not-- 'cause we know what's the biggest danger, of course, to everyone, uh, certainly for digital, it's your back space bar on, on your keyboard, right?

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Yeah. You know, that's bad, I'm gonna go back and find something else. So how unique is your content, is your POV?

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You know, I think one of the challenges, and AI will exacerbate this a little bit, is, you know, when people were trying to flood the zone and say, "Oh, we gotta publish fifty pieces a day," and just, just go at it, well, lo and behold, that content wasn't so sticky because it was every place.

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And so, you know, hopefully it's gonna be a period of time. I think you are gonna see another explosion of AI powered BS content because they can do it.

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It'll be great for the, your point about the, the, what, the glue factory of, uh, of, uh- SEO... uh, SEO. And that may work and, and again, shame on marketers.

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You know, you, how many, how many totally bullshit websites do you hit into Google search that you think, "How did anyone ever decide to spend money here?" Yeah. Of course, they did.

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Well, well, I, I saw my, my former place actually wrote like an explainer about, like, MFAs, you know, made for advertising sites.

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And it's always like it's a really difficult line because, you know, people operating these sites, like, you know, be like, "Well, look, you know, like, a lot of lifestyle brands are just made for advertising if you really think about it hard enough."

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And but this is just truly, you know, and it's the incentives o-of algorithms are that, like, you know, you write to algorithms or, and you're just, it's, it's made for advertising at the end of the day. Yeah.

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And you, you see it, you know, at whatever percentage, but a big percentage are, like, terrible experiences. Yeah.

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But they're trying to pull a fast one on marketers, and shame on the marketers for not having the proper controls in place to be able to realize that they just bought an experience with bad ad products, you know, like junk, junk, junk.

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Well, I think you're gonna get both o- it's gonna be easier than ever for three young women in a Brooklyn brownstone to do that with AI, so there'll be a ton of new businesses.

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But again, uh, I guess I would hope is, you know, um, will there be a chance for brands that actually matter? You know, if you're Vogue, if you're Good Housekeeping, if you're The New York Times.

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And so, um, you know, the industry may get a little thinner but hopefully deeper at the same time. That's not a bad outcome in the grand scheme of things.

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And, uh, so I, I am optimistic that, you know, that the, the bus- these businesses are gonna find new ways to connect.

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L-let's also talk about, you know, the, the positives of AI is, you know, between the pole of ending civilization and saving civilization is this kind of discussion that it's an I, it's an iPhone moment. Mm-hmm.

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That you don't have the impact of the iPhone.

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And I remember seeing something on Twitter a number of years ago, it was a photograph, and it was the number of businesses who found themselves dramatically impacted by the arrival of the iPhone.

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Think about it, landlines, calculators, alarm clocks, digital cameras, physical maps, right? On and on it went, right? Yeah.

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And so if you think of it's an iPhone moment, then the question is what are the businesses that are disruptable?By, by being active and in the space.

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And so, uh, so I, I, I- My general rule of thumb is media always goes first [laughs]. You know, like when the internet came, like it-- other industries were more delayed, but like media went first.

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Like, and us, the, the music industry really went first. First in, first out, though. Now let's be clear. Yeah. Okay? The music industry went, it definitely went in first, uh, but then somehow came out the other side.

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The demand, the one, the biggest growth industry I think in the country is live events, live experiences. Not only Taylor Swift aside, but other music festivals.

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And so I, I do think there's opti- I'm gonna be optimistic. But at the same time, in the Hearst world, you know, the best, the best owner of media assets is a company that has a lot of non-media assets as well.

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And so- [laughs]... and you know, during COVID, the first year of COVID, there were no layoffs in the organization.

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We enhanced people's, uh, medical benefits, uh, because the strength of the B2B businesses when advertising plunged for that first, you know, few months, listen, you know, the B2B businesses allowed the P&L to only get moderately impacted that year.

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And so- Hmm... you know, the reason I'm such a fan is I get a ch- we get a chance to see on the inside what does diversification look like?

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Well, in the second quarter of twenty-twenty, we saw, boy, thank goodness to, to Frank Bennack and to Steve Swartz. Yeah.

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I mean, and that is also, you know, I think a lot of times people talk about scale, scale being dead and stuff like this, and there are a lot of benefits to, to scale when it comes to resiliency particularly that.

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I do wonder, though, in an AI era, if scale ends up flipping from being a, a benefit to something of an albatross only because there are presumably going to be so many different, um, functions that are gonna be able to be done so much more efficiently that the competitive advantages of, like, larger media companies versus smaller would narrow.

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Potentially. But, you know, at the end of the day, and especially when you go through, you know, bumpier economic times and such, that, you know, I think that companies...

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Th- you think of bo-both you get, we, y-your business, uh, depends on people giving you revenue, both consumers and marketers.

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I, I would hope that marketers will increasingly realize companies that you know are gonna be in business twelve months from now, three years from now- Yeah...

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ten years from now, thirty years from now, are going to matter. I think that's benefited a lot in terms of the television business.

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Everyone has, of course, been coming up with their video alternatives, but if you look at the revenues, again, they've been under some pressure of late, but the, the revenues for the large, you know, uh, television operators have been pretty resilient because people know that Comcast is gonna be here as far as the eye can see.

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And I- Totally...

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and so I do think that is, uh, the, the more, uh, tech-driven owning with style stuff that's out there, that there is a residual benefit for companies that matter, which includes Hearst, includes Walt Disney, includes Comcast, includes Comcast, includes others.

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So there is somewhat of an offset. And again, the big question, though, is, you know, when advertising growth resumes, it's gonna look different than it did before, as I mentioned. Who's gonna be best positioned?

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Who's going to intuit it correctly, the old Gretzky, you know, statement about you wanna skate to where the puck is going to be? Yeah.

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And, and you're gonna have a chance to do a lot of reporting and to grade the companies that figure that out and were well positioned on the other side of this kind of economic, uh, recession that we're in right now.

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And, and I, I very much believe that many of our Hearst brands will be there. This is what people are encouraged to do. Awesome. Cool. Well, thank you so much, David. Really appreciate you taking the time.

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Nice to see you. You know what? I, I love meeting people who I listen to, uh, in my ears all the time. It helps to- Oh, excellent... and, and so, uh, a-again, thanks for the, the good work.

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And again, I think that this period of disruption is gonna be great for your audience, uh, to hear, uh, executives and leaders of how they, they navigate through this.

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It's gonna be the most interesting part of my career. And, uh, again, I'm grateful for the perch that I have to be able to watch it. Yeah. Awesome. Thanks again. Thank you. Bye-bye.

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[upbeat music] Thanks so much for listening this week. Hope you enjoyed this conversation with David. Thanks a lot to Jay Sparks of Podhelp Us for his help in producing this show.

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You could have your own podcast, and I think you should. Contact Jay. He can help you out. Visit podhelp.us, and you can find out more information.

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