Photographer: STEPHEN HILGER/Bloomberg

Hearst Plans More Acquisitions in 2017 to Rely Less on Media

  • ESPN streaming audience has ‘grown significantly,’ Hearst says
  • Hearst spent more than $2 billion on deals in 2016, CEO says

Hearst Corp., the publisher and TV station owner, will be an active buyer of companies in 2017 as part of an effort to cut its reliance on traditional media businesses, President Steven R. Swartz said.

The closely held company, which owns a stable of newspapers, magazines and TV stations, spent more than $2 billion in 2016 on acquisitions to “significantly reshape our business mix,” Swartz said in his annual year-end letter to staff.

Hearst is diversifying at a time when cable TV ratings are down and advertising revenue is declining at newspapers and magazines. The company’s largest acquisition this past year was CAMP, which provides safety data and maintenance for corporate jet owners. Hearst also bought a majority stake in MedHOK, a health-care software company.

Swartz acknowledged the challenges his company faces.

“The media industry is coming to grips with a less favorable supply and demand equation,” he said, noting the internet has created “virtually unlimited places to put advertising.” Swartz said Hearst is trying to increase subscription revenue to become less dependent on an uncertain advertising climate.

Hearst’s growing role in providing data and software to other businesses is expected to contribute up to 25 percent of profit in 2017, he said.

“We’ll look to be similarly active on the acquisition front in 2017,” Swartz said, but he added that Hearst “has always been and always will be a media company.”

For 2016, Hearst recorded its sixth consecutive year of record profit, while sales grew modestly to $10.8 billion, Swartz said. The company didn’t disclose its income.

Along with its 30 TV stations, Hearst owns a 20 percent stake in ESPN, the rest of which is controlled by Walt Disney Co. The sports channel was once considered the crown jewel of Disney, but lost viewers as consumers dropped their pay-TV subscriptions. The two companies also share ownership of A&E Networks.

ESPN recorded higher year-over-year profit. The network’s streaming of live sports “has grown significantly” and ESPN’s new NBA broadcast deal, while costly in the short-term, “will position it as television’s most valuable franchise for as far as the eye can see,” Swartz said.

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