2024 saw unprecedented income and earnings for Hearst Corp., as stated by its CEO Steve Swartz. However, he predicts that 2025 might present a tougher business landscape.
In today’s correspondence to Hearst’s workforce, Swartz outlines the performance of the different sectors within our organization. As per his letter, our company surpassed the $13 billion mark in earnings last year, setting a new all-time high.
The significant expansion in our operations was mainly attributed to the contributions made by Fitch and Hearst’s local TV stations, particularly during a presidential election year. These two sectors enabled us to thrive amidst difficult market conditions that affected several of our consumer media businesses, as stated by Swartz.
Specifically, the advertising, print media, and cable TV industry faces challenges, but Hearst Corporation is fortunate to hold a 20% stake in what might be the most valuable sports brand: ESPN (with Disney owning the remaining 80%). Swartz expressed confidence about ESPN’s potential expansion, acknowledging that they are investing capital to debut their ESPN flagship streaming platform this year. Additionally, Hearst jointly owns A+E Networks with Disney, each holding a 50% stake.
2021 was a challenging year for me, as a gamer and content creator, navigating the ever-evolving landscape of my newspaper, magazine, and A+E Networks partnership with The Walt Disney Company. The advertising market became fiercely competitive, and shifts in consumer behavior like cord cutting, decreased search traffic, and the rise of generative AI significantly impacted our profits.
Moving ahead, it seems challenging to expect a continuation of profit growth in 2025 based on the current conditions and our initial predictions. One obstacle we’re encountering is a substantial decrease in election advertising at our television stations, given that major U.S. elections occur every other year. This regular and anticipated reduction coincides with an intensifying competition in the advertising market, which is making it harder for linear television to compete against data-rich services from streaming platforms and social networks. The more competitive ad environment, combined with ongoing cord cutting, is also negatively affecting A+E.
And the company increasingly views generative artificial intelligence as both friend and foe.
Last year, we initiated training sessions for our team members on leveraging generative AI to enhance their daily workflows, and it was a promising beginning. However, there’s plenty of room for further advancements, Swartz noted. In preliminary trials, we’ve observed substantial improvements in productivity when applying generative AI across various sectors such as software programming, sales, marketing, data collection, and HR. We foresee immense potential for this technology in enhancing customer satisfaction and streamlining the onboarding process for new B2B clients.
He emphasized that the initiatives aren’t intended to supplant our team members with machines, but rather to enhance their efficiency, enabling them to focus more on crucial tasks like developing innovative new products and improving existing ones. He highlighted some encouraging endeavors by our staff using generative AI to produce novel data and media items, notably in the newspaper sector and our health division. However, it’s important to note that this isn’t entirely positive news, as new competitors are leveraging generative AI to enter our market, particularly in the health sector. Furthermore, generative AI search products are eroding the digital traffic of our magazines and newspapers. Therefore, we must adapt to these changes.
Initially rooted in the publication industry (newspapers and magazines), Hearst Corporation now primarily generates its income from television broadcasting, and this trend is expected to continue. Moreover, business-to-business ventures such as Fitch and MCG are becoming increasingly significant contributors to the company’s profitability. In 2024, these B2B businesses accounted for half of the company’s profits, marking a substantial increase from just 15% a decade prior.
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2025-02-18 21:56