Hearst CEO Addresses the Troops

TN-490766_StevenSwartzDec08Steven Swartz, CEO of Hearst, has sent out a letter to staffers explaining what was successful in 2013, and how the company will navigate 2014. It’s the typical “state of the union” note that every CEO pens, filled with phrases like “growth strategy” and “core portfolio.” Still, it’s worth a read.

One section we found interesting is how Hearst is growing in the healthcare sector:

In December, we announced the acquisition of 85 percent of Homecare Homebase, a leader in the field of providing software, data and analytics to the fast-growing homecare and hospice industries. Homecare Homebase, founded and led by CEO April Anthony, becomes the fourth significant company in the Hearst healthcare portfolio, along with First Databank, Zynx Health and MCG. In its first full year under our ownership, MCG, led by President and CEO Jon Shreve, outperformed our optimistic expectations and finished the year with profits up more than 25 percent.

See below for Swartz’s full note.

Dear Colleagues,

I want to begin by thanking each of you for your contributions to our many accomplishments over this past year. Hearst achieved record revenue and profit in 2013, and recorded its fourth consecutive year of revenue and profit growth since the recession of 2008–2009.

Strong year-over-year performances came from our cable networks, A+E Networks and ESPN; Fitch Ratings; healthcare businesses First Databank and MCG, formerly Milliman Care Guidelines, acquired last December; and the newspaper group. Our U.S. magazines grew profit in 2013, and our television stations exceeded expectations and are poised for a strong 2014 with the return of the Olympics and congressional and gubernatorial elections. Our ventures team scored a very strong return on its investment in digital marketing company HootSuite.

Hearst’s outstanding performance reflects the quality of what our talented colleagues create every day for the screen and the page, and the strong and innovative partnerships we forge with our clients around the world. Our profit achievement also reflects the hard work of so many who constantly look for more efficient ways to do business without compromising the quality of what we offer customers.

Our business mix continues to evolve. Today, roughly 60 percent of our revenue comes from sources other than advertising revenue, including carriage fees for our cable networks and television stations, business-to-business and consumer subscription revenues, and marketing services fees. More than 20 percent of our revenue is derived from outside the U.S.

On June 1, our executive vice chairman, Frank Bennack, ended his second tour of duty as our chief executive. A few weeks later, he and I spoke with our chairman, Will Hearst, and the rest of our board members about the fundamental principles of Frank’s highly successful 30-year run and how they form the basis of the company’s future growth strategy.

We boiled them down to four, not necessarily in order of importance:

I. Continue Remaking Our Business Mix for Growth

II. Strengthen Our Core Portfolio

III. Become a More Digital Company

IV. Secure and Retain Top Talent

I’m going to discuss each of these in the context of what we accomplished in 2013 and what we will continue to do in the years ahead.

I. Continue Remaking Our Business Mix for Growth

A hallmark of Frank’s tenure has been the continued allocation of capital to the sectors of the media and information landscape that have offered the best prospects for growth. While this is of course harder than it sounds, we are confident that there are two areas where we have shown particular skill and where the underlying growth prospects are quite strong: business media and entertainment.

Hearst Business Media, led by Rich Malloch, was active in 2013. In December, we announced the acquisition of 85 percent of Homecare Homebase, a leader in the field of providing software, data and analytics to the fast-growing homecare and hospice industries. Homecare Homebase, founded and led by CEO April Anthony, becomes the fourth significant company in the Hearst healthcare portfolio, along with First Databank, Zynx Health and MCG. In its first full year under our ownership, MCG, led by President and CEO Jon Shreve, outperformed our optimistic expectations and finished the year with profits up more than 25 percent. First Databank acquired Design Clinicals, a company that helps hospitals reconcile the drugs a new patient is already taking with those the hospital seeks to prescribe. Under President and CEO Paul Taylor, our 50 percent–owned Fitch Ratings business acquired 7city Learning, a financial services industry training company based in London that we’ve renamed Fitch Learning. Meanwhile, our two principal automotive businesses kept their amazing profit-growth streaks alive: For National Auto Research/Black Book, headed by Tom Cross, it was its 22nd straight year of profit growth and for Motor Information Systems, under Kevin Carr, its 20t straight year.