Thursday, October 11, 2007
Why Hearst has reason to thank the global Cosmopolitan woman
By Joshua Chaffin
Every two years, editors from the 58 foreign editions of Cosmopolitan magazine descend on Hearst Corporation's Manhattan headquarters for a global summit. And each time, George Green notices that the Cosmo girls from around the world seem to be growing ever more alike.
"If you walk down the street here on Eighth Avenue or in Beijing or Singapore, women look the same. They're wearing the same jeans, they're listening to the same music," says Mr Green, chief executive of Hearst Magazines International. "They don't want to be American but they want to be more like their American sister than ever before."
For nearly two decades, Mr Green has ridden that trend as he has spread Cosmopolitan and other Hearst magazines - including Esquire and Good Housekeeping - around the globe. The company now boasts nearly 200 foreign editions. This year, they are expected to post double-digit growth and account for about a third of the Hearst magazine group's profits - up from about 10 per cent five years ago.
That contribution is particularly welcome at a time when consumer magazines are under pressure in the US. They are facing new challenges for readers and advertisers from the internet. With about 90 per cent of their sales coming through subscriptions, they are also suffering higher postage costs.
"The international business is better than ever," Mr Green says, pointing to places such as eastern Europe and Asia, where growing economies are giving consumers new appetites for luxury items.
As it seeks to expand its global footprint, Hearst is looking at a more developed market: the UK. It has bid £700m ($1.43bn) for the consumer magazine group at Emap, which includes such titles as Heat and FHM.
The deal would bolster Hearst's wholly owned subsidiary, The National Magazine Company, which publishes Cosmo and 18 other titles in the UK. It would also bring the company full circle. The privately held publishing group first ventured outside the US in 1910 when founder William Randolph Hearst bought Nash and Pall Mall.
When Mr Green took the helm of the newly established international division in 1989, he focused primarily on licensing Hearst's famous brands rather than outright acquisitions. The strategy, he says, was more akin to extending an already successful magazine than the risky business of launching new titles.
Along the way, Mr Green has chosen to give an extraordinary amount of autonomy to editors in places such as China and Kazakhstan - allowing them to determine whether the word "orgasm" can appear on their covers and other sensitivities - rather than sending in US editors to oversee them. "I don't have anyone anywhere and I don't have any intention of changing that," Mr Green says.
The more important task for Hearst has been finding the right local partner. One unhappy experience came in Turkey in the mid-1990s when Hearst bought a one-third stake in a newspaper and magazine publisher. "It was making a lot of money," Mr Green recalls. Unfortunately, the Turkish partners also owned a bank, which failed after the financial crisis in the late 1990s. The government stepped in, seizing the bank, and the publishing group along with it.
The pain of that venture, though, has been offset by Hearst's success in places such as Russia, where it contributed $75,000 to a Cosmopolitan joint venture in 1994. In spite of the lean times following the country's debt default in 1998, it now generates more than $100m a year in revenue, and has provided a launching pad into markets such as Ukraine and Georgia.
"It's gut," Mr Green said of his talent for choosing foreign partners. "I think your gut is the accumulation of all the experience you've had in your life."
Copyright The Financial Times Limited 2007