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The Talk of Hearst

With our scorecard on Hearst and the magazine business, you will be able to answer the riddle: "What's Black and Brown and read all over?"

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"Entre nous and off the record," says a veteran Hearst executive, with obvious relish, "I can't see Tina reporting to Cathie, and who exactly does Ron report to?"

Cathie is Cathleen Black, the president of Hearst Magazines, and Ron is Ron Galotti, the president and publisher of Talk, making its debut this week, and Tina is Tina Brown, the subject of everything but this column.

The subject of this column is the Hearst Corporation, which, as much as Tina Brown, will determine what happens to Talk.

"What's your story?" snaps Hearst spokesperson Debra Shriver. "This is so inside baseball."

But inside baseball -- making her own story the central one -- is what Tina Brown does when she creates a magazine. As it happens, having inside baseball's bright lights turned on is exactly what Brown's new partner fears. A big part of Hearst's modern identity is its allergic reaction to William Randolph Hearst's having been the media star for much of the century -- from his international provocations to his presidential ambitions to his Citizen Kane moment to his near bankruptcy and extending to his granddaughter's kidnapping.

This reticence or cold shoulder is in marked contrast to the demeanor of the Newhouse organization (and its Condé Nast magazine company), where Brown had spent her career until leaving in something of a dramatic huff last summer. While both Hearst and Newhouse dominate the women's-magazine market, and both have major national newspaper holdings and big stakes in television and cable properties, and both are private and family-owned (they vie for the title of largest family-owned media company), that's about it for similarities.

For the past generation, the Newhouses' Condé Nast has defined the chattering media class, its excesses, its conceits, its fads, and, arguably, its brilliance; many maintain that this definition of media was the creation of Brown herself (in fact, that Brown defined Condé Nast). As for the Hearst Corporation, if becoming an icon weren't in itself a vulgar media thing to do, the company might be an icon for blandness and facelessness in a glitzy, high-profile world.

"We're a private company. We don't have to talk to the media," insists its spokesperson. "When we do, we only talk to reporters we want to talk to. So we're not talking. We're private. Period. What part of 'We don't want to talk' don't you understand?"

The fact that Hearst is behind the most public launch of a magazine in the history of magazines has a certain screwball-comedy quality, if also, possibly, a clear business logic.

Hearst isn't where Tina Brown meant Talk to end up. Talk was conceived and announced last summer as a partnership between the Brown-Galotti team and Miramax, a wholly owned unit of the Disney Company run by the Weinstein brothers, which would fund the start-up. Within a few months, however, leaks and rumors out of Disney and Miramax reported that Harvey Weinstein was stunned by the initial business plan, and Disney chairman Michael Eisner apoplectic. The plan, which Brown and Galotti have variously described as calling for $50 million or $60 million, but which many magazine hands surmise will easily run over $100 million, went into a form of turnaround last winter, with Brown and Galotti denying they were looking for partners as they were seen in apparent negotiations with Hachette Filipacchi's CEO, David Pecker. Hachette's French owners, however, balked, and in February, Brown announced that the Hearst Corporation, contributing distribution and a range of other unspecified publishing services, would join Disney-Miramax and Galotti-Brown in the deal.

Given Hearst's historic risk aversion (though the company is owned by the Hearst family, it is run by professional managers, who are judged on the basis of the high dividends they return; as they say at Hearst, the company is run not by the family but for the family's benefit), what would be the rationale for taking a gamble on Brown -- a woman who has possibly lost more money in the magazine business than any person in history?

The answer, most probably, is that although someone may be taking a big risk, it isn't Hearst.

Brown and Galotti's initial plan called for launching the magazine with a 500,000 circulation (which would have made it, overnight, a major magazine -- The New Yorker's circulation, for instance, is 800,000), but so far there has been only a modest subscription promotion. This means Talk is being launched by the traditional and cautious Hearst method: Don't front-load a magazine's costs with an expensive direct-mail subscription campaign (by a typical formula, it costs $20 million to gain 100,000 subscribers through direct-mail promotions); instead, "test" the magazine on the newsstand, and see how it does. If it doesn't do well, if it doesn't make its numbers over the period of the test, Hearst can pull the plug without having committed significant dough. (Bob Vila's American Home and Esquire Gentleman are magazines that Hearst tested and abandoned; likewise, Marie Claire and SmartMoney are both magazines Hearst launched with partners, thereby minimizing its overall investment.) The other key aspect of this approach is that Hearst, relatively speaking, controls how well a magazine does at the newsstand. In the "single copy" business, there are only so many "pockets." Every time you see Talk on a newsstand or in a supermarket, you won't be seeing something else. Hearst will have to take pockets from its flagship magazines, Redbook and Cosmo and Good Housekeeping, to give to Talk. Indeed, in some ways, the main job of launching Talk becomes how to get preferential treatment at Hearst.


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