Hearst wants new UK CEO to drive 'ambitious M&A strategy'

The global boss of Hearst Magazines has said "a much more ambitious acquisition strategy" should be a priority for its next UK chief executive in a sign that the publisher still has faith in its British operation.

David Carey, the US-based president of Hearst Magazines, said in an interview with Campaign that he hoped to appoint a new UK chief executive to replace Anna Jones by the start of February 2017 and was upbeat about the outlook despite a recent exodus of UK talent.

He said Jones’ successor had three tasks: First, make sure "the current portfolio of titles is optimised", potentially by closing more titles. Second, drive growth in print and digital, including more brand content partnerships such as chef Jamie Oliver’s monthly magazine, Jamie. Third, adopt "a much more ambitious acquisition strategy".

The UK has been "allocated for capital", Carey said, explaining how the owner of Harper’s Bazaar, Good Housekeeping, Cosmopolitan and Esquire wants to invest in its most important market outside the US.

"I’d hope in 2017 we’d return to much more active M&A," he said, noting privately-owned Hearst Magazines has made $2bn (£1.6bn) of acquisitions during his seven years in charge, including the 2011 purchase of Lagadère, owner of Elle.

"It’s our goal to grow the UK business. If we’ve not expanded the business in a year from now, you can call me out on that."

He did not identify any targets but noted Hearst has bought some US business-focused titles and marketing agency iCrossing to serve brands, as well as consumer-facing magazines. Hearst UK has also expanded in live events. "We do take a look at everything that’s out there," he said.

Carey said he is "personally more involved" in the British business. He has decided the UK chief executive will no longer have responsibility for Comag, the magazine distribution company that Hearst co-owns with Condé Nast, so he or she can focus on the "digital transformation" of the core media business.

He also confirmed a number of US executives have been working in the London office, particularly on digital publishing, which he said needed a more global approach as part of his "One Hearst" strategy.

"We haven’t done a sufficient job of sharing learnings," he said, explaining why he felt it was important for US staff to come to London. "The UK and US are similar markets."

Hearst UK fell to a £5.4m loss and sales fell 4.8% to £282m, according to 2015 accounts filed last month, but Carey insisted the core media business "hasn’t suffered" and the loss was largely down to a writedown at Comag.

He is "very pleased" with how Hearst has increased profits four years in a row globally.

Carey played down the departure of five senior Britons in the last six months, saying each of them has exited for different reasons, but he said: "The frequency is probably more than we’d like."

Jones, the UK chief executive since 2014, is leaving next February to co-found an entrepreneurial venture, AllBright, that will back female-led businesses.

Other recent departures include Lorraine Candy, editor-in-chief of ELLE, and Duncan Edwards, vice-president of Hearst Magazines International.

Hearst UK also warned staff last month that jobs were at risk as it plans to close two online titles, Reveal.co.uk and Sugarscape.com, and print magazine All About Soap.

Carey said he was "grateful" for the contribution of those who are leaving. However, he pointed out Hearst UK employs more than 800 people and the arrival of some new senior figures would mean "fresh ideas".

He has been talking to some "great" internal and external candidates for the UK chief executive role. "The glass is more than half-full," he declared.

Carey is taking different approaches to print and digital. "Our ‘print on ink’ business is essentially a local business," he said. "You don’t need much [global] scale. But a winning digital business is only a global business – with Google and Facebook and the ascendant power of Snapchat [as rivals]."

He said locally-created content with global appeal is an opportunity. He cited a story on Cosmopolitan’s UK website, about how drinking champagne every day could stave off dementia, which got 20,000 shares. Then the editor of Town and Country in the US picked up the article and it got 2.5 million shares.

"There is so much great content that lives in the Hearst eco-system," he said,

Carey envisaged 15% of editorial content could be international and 85% local on some magazine websites in future.

This shift means "scale becomes our friend", instead of local silos and "complexity for complexity’s sake". Facebook, Snapchat and other digital media owners do not think locally, he added. "Facebook is the same in Australia and Austria and Austin, Texas."

He said a more global approach will appeal to advertisers that increasingly want to run international campaigns and programmatic ad-buying is also becoming "more global".

Local silos have been a "self-inflicted" problem for Hearst, according to Carey, who explained: "If L’Oréal bought something [an advertising proposition] in the UK and also wanted to buy it in Italy, it was so difficult."

Digital already generates a third of profits for Hearst Magazines in the US and content on well-known personalities such as Kate Middleton and model Karlie Kloss has been winning big audiences in multiple markets.

He insisted the growing importance of digital scale did not mark a retreat from high-end publishing. "The value of premium content only becomes more important, because you can take a piece of quality content around the world and it can resonate across markets," he said.

Hearst is also creating new titles such as Pioneer Woman, inspired by US food and lifestyle blogger Ree Drummond, which will launch in print in Wal-Mart stores in the US in June 2017, and a joint venture magazine with Airbnb, which debuted last month.

It is "OK" to close print brands "when they are not working", Carey added.

He joined the UK board of Comag in July and admitted magazine distribution is "a tough business" as print sales have fallen across the industry. Comag’s accounts showed it fell to a £3.9m loss last year.

He offered no comment on whether Hearst might consider selling its majority stake in Comag. Hearst and Conde Nast sold the North American division of Comag in 2012.

Carey described working in the magazine industry during the current wave of digital disruption as "exciting, complex, exhilarating, sometimes frustrating".

"I love it," he said, adding: "It is not a time to play it safe for marketers or media owners."


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