The Talk of Hearst

“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.

Within the Newhouse organization, Tina Brown achieved most-favored status because she pleased Si Newhouse, a remote mandarin who seemed to live vicariously through her dominance of the New York media world. The comparable figure at Hearst is Frank Bennack, the CEO and 43-year veteran of the company. But where Newhouse presides over something akin to the court of Louis XIV, Bennack runs an enterprise closer to the feel of U.S. Steel. “He pays the bills,” observes a magazine hand, with something like praise. “He loves his numbers,” muses a Hearst publisher. Bennack, from Texas and the radio and newspaper businesses, is variously described as someone who will get Tina and as someone who won’t get Tina at all (he is said to have gotten Harper’s Bazaar editor Liz Tilberis, pleased that she could produce buzz without Anna Wintour’s cost). What that means, I think, is that if Tina Brown can return good numbers (say, a 70 percent sell-through at the newsstand), he will get Tina; if she can’t, he won’t.

But it is Cathie Black, the 55-year-old president of Hearst Magazines, who is probably Tina Brown’s most important ally or most serious potential antagonist (one camp says that Black wanted the Talk deal; another says she was bitterly opposed).

In the seventies, ten years before Brown got the title, Black, cutting a striking figure with her pre?Ralph Lauren preppy look, was what the (male) head of a major magazine company called the “media chick” of the moment (the magazine business was just beginning its transition from a male world to a female one). She was at Holiday magazine in its heyday, then Travel & Leisure, then Ms. in its important years, moving in Francis Ford Coppola’s entourage during the seventies, then becoming New York’s publisher, then publisher of USA Today in the eighties and president of the Newspaper Association of America in the nineties.

So far in her three years running Hearst Magazines, Black has eased out Ed Kosner at Esquire and hired David Granger, but Esquire’s circulation continues to plummet; she’s finessed the retirement of Helen Gurley Brown at Cosmo and slid Marie Claire’s star editor Bonnie Fuller into the position, only to have her quickly poached by Condé Nast and then to be rebuffed by Newhouse lawyers in an attempt to hire her back. Black, in turn, has raided Condé Nast, where she nabbed former GQ publisher Michael Clinton. But it’s only now, with the launch of CosmoGIRL!, the new Oprah title Hearst recently announced, and most notably Talk, that Black gets to have a serious impact on Hearst. In that regard, Tina Brown is the opportunity of a lifetime or some major, major pain in the ass.

It is all a question of emphasis, or return on investment. And something to do with branding, someone undoubtedly has argued at Hearst.

In other words, Si Newhouse has spent hundreds of millions of dollars to create Tina Brown; during the past year, Disney and Miramax have spent numbers of millions more. Now the Hearst Corporation can get the benefit of that investment for relatively little. Instead of being known as the company that killed Esquire (applying its bottom-line formula, as Esquire circulation profits failed to measure up to Hearst standards, it cut Esquire’s page count until it looked like a giveaway magazine next to its fat competitors Vanity Fair and GQ), it will now be known as the company that publishes Tina Brown. And Tina Brown, as they might say in Selling for Dummies, is an opener. (Oprah is a pretty impressive opener, too.)

The job for Tina, of course, is to get her magazine to turn a profit – or to become “viable” – before Hearst decides that it has gotten the value it’s going to get out of her. Similarly, when Hachette launched JFK Jr.’s George, the calculation must have been that Hachette was willing to lose $20 million or $30 million or $40 million on the greatest opener of all time rather than on the specific potential of a consumer magazine devoted to politics. Indeed, during the past few months, it seemed that Hachette was trying to decide how much more the greatest opener of all time might be worth, or whether JFK Jr. had opened all the doors he was going to open for them.

Shortly after the announcement of the Talk deal, Cathie Black threw a dinner party at her Park Avenue apartment for Tina and her friends – Peter Jennings, Charlie Rose, Steve Rattner, Michael Bloomberg, and Geraldine Laybourne among them. Some of Tina’s crowd complained that the party was a dud. “Goofy, not so fabulous, the country mouse comes to the city. And dinner was served way too late,” says a Tina-minded editor. But that surely misses the point, which is not, first and foremost, to go all-out to make Tina look good but, for as little as possible, to let Hearst rub elbows with Tina’s set and make it look a little better.

In the end, if Tina does well, Hearst will own a meaningful piece of Talk; if she doesn’t do well, it will be her downfall and, all in all, for Hearst, not that costly a stumble. That’s how Hearst must see it, anyway.

But Tina, of course, is not without power and resources of her own (not to mention Harvey Weinstein’s particular talents). Being an entrepreneur – the unlikely position in which she finds herself – is a new sort of geopolitical spheres-of-influence game. You have to align with a superpower, which will, reliably, act only in its own interests. Still, Tina has always managed to spend enormous sums of other people’s money that they no doubt did not originally plan to spend. She is able to accomplish this trick in part because people and companies get a little crazy when the light (even the reflected light) falls on them and, of course, because she always manages to make herself the drop-dead center of attention. Indeed, this column, I notice, is not about Hearst but about Tina once again.


The Talk of Hearst