BLACK WON'T MAKE RUSH TO JUDGMENT;ONE ON ONE: NEW PRESIDENT WEIGHS THE NEED FOR ADJUSTMENTS AT HEARST

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Since taking the helm in January as president of Hearst Magazines, Cathleen Black has instituted an open-door policy on her executive suite and raised the company profile in meetings with advertisers

from Detroit to the fashion world.

Still, with ad pages for many of the privately held company's titles skidding through the first five months, industry observers had expected more dramatic action and executive changes-and believe they may soon see them.

In her first in-depth interview since taking office, Ms. Black, 52, talked with Advertising Age Senior Editor Keith J. Kelly about her management style and company plans and strategies. She stood by some controversial company moves and had strong words for her early critics.

Advertising Age: Your corporate management style is one of "no surprises," but some have faulted you for exactly that. They had expected you to go in and shake things up at Hearst.

Cathleen Black: I felt it was extremely important for me, coming

into Hearst, to understand our businesses, to understand where the opportunities were and to get to know the people. Over time, I probably will begin to make changes, but I believe that change for change's sake is not the right way to run a business today. I don't have a helicopter with 12 Green Berets waiting to descend on the company. I need to know exactly what we need to do and then, if I think change is needed, I will implement change.

AA: Conde Nast President-CEO Steve Florio said publicly that he doesn't think you've done much since taking over at Hearst and that you "can't make up [your] mind."

Ms. Black: I am not running this business according to what anyone else expects or says. It just doesn't matter. I think generally when people make cracks like that, they are feeling threatened.

AA: You just named Valerie Salembier as the new publisher at Esquire (see Player of the Week, Page 27). Rumors have heated up that a

change is imminent at Good Housekeeping and that Publisher Alan Waxenberg will be moved to a corporate post (see related story on

Page 47).

Ms. Black: I continue to be very supportive of Alan Waxenberg. It's been a tough year for Good Housekeeping, but we expected that.

AA: When your appointment was announced last November, you said that you "unequivocally supported" the controversial move by Hearst to cut rate bases, boost newsstand and subscription prices and increase ad prices. Have you changed your stance?

Ms. Black: That circulation strategy allowed us to manage the circulation for each of our titles more effectively and efficiently. It was a very successful strategy. I don't know that there was

another publisher in America that believed so strongly in its editorial that it raised the newsstand price on nine of 16 core titles. And over the first quarter of '96, 15 of our 16 core titles were up in newsstand sales.

AA: Is Hearst disappointed that more publishing companies haven't followed suit?

Ms. Black: We don't measure our success by which way the wind is flying in other companies. The truth is, we were leaders and many of them have followed. They just did it more quietly than we did.

AA: On the ad side of the formula, however, you seemed to have encountered some fairly stiff resistance in some quarters. Objections seemed to center on two areas: advertisers who did not believe the total audience level would hold steady if circulation was lowered and those who objected to the price increase.

Ms. Black: It's past history. We've moved forward. The company was prepared for the volume drop-off. The fact is, it focused our individual publishers on drumming up new businesses in the magazines.

AA: The harshest-but certainly not the only criticism-came from

Kraft and Philip Morris. The Kraft business is gone this year, but do you see that business returning?

Ms. Black: I believe we will do business with Kraft and [Kraft parent] Philip Morris again. It's a situation that I have been very personally involved with. I've had nearly a half dozen meetings with

a variety of people.

AA: Are you close to resolving it? Will there be a major return of Kraft advertising to such titles as Good Housekeeping next year?

Ms. Black: We basically have reached an agreement with Philip Morris and Young & Rubicam [a core Philip Morris and Kraft agency] for the 1997 contract year. Of course, I hope there will be business in the fourth quarter.

AA: We've heard rumblings that Hearst was not interested in the

men's field and that one title or another is on the block or that the whole men's group will be sold.

Ms. Black: Generally, what you see in the trades is spread by our competition. This is a great opportunity for me to say Hearst is interested in acquisitions. We're not sellers.

We fully support our men's group. There is no book out on any individual title or any group of titles. We believe in the men's

field and the magazines that we have in the men's field. Popular Mechanics is over 100 years old and it is a phenomenal brand. We believe Esquire can regain the stature that it had. It's an international brand. Sports Afield under Terry McDonell's leadership is a marvelous outdoor magazine now with a literary bent.

AA: If you're interested in acquisitions, are you taking a serious look at Petersen Publishing?

Ms. Black: No. The kinds of acquisitions that we would probably make going forward would be different kinds of publishing models. They might be outside of New York City. They might be more niche publications. We don't believe we have to chase big companies. We've been more successful in spinning off titles from our core titles. It is our editors who really drive the present and the future.

AA: There is an unprecedented wave of consolidation taking place in magazine marketing channels. Many small local wholesalers are being acquired by large super-regional wholesalers. Could that eventually hurt your ability to do traditional "Hearst-style" newsstand tests, where you put new, untried titles out and see how the public reacts?

Ms. Black: We don't think so, not with the present clout that we

have in the newsstand business.

AA: What titles are you testing right now?

Ms. Black: Country Living's Healthy Living is in the marketplace right now with a first issue. Country Living Gardener went from four times last year to six times this year. Bob Vila's American Home will test on newsstands in September and then if the results are encouraging, test a second issue in the spring.

AA: What about Total Sports?

Ms. Black: ESPN's Total Sports had eight issues this year. We continue to watch it.

AA: Hachette Filipacchi claims its Elle is now solidly the No. 2 fashion magazine, closing in on Vogue after surpassing Hearst's Harper's Bazaar. Is that claim true and does it concern you?

Ms. Black: I don't know. [Hachette Filipacchi Magazines President-CEO] David Pecker can do what he wants and can buy circulation wherever he wants.

We like our circulation to be profitable...Harper's Bazaar is a unique fashion magazine with a unique mission and I think the best editor in the business.

And right now with the way the fourth quarter is shaping up, it will be profitable.

AA: Are you concerned about Conde Nast House & Garden? They're

saying they will have more than 150 ad pages and may break the record set by George only last year with 175 ad pages at launch.

What is this going to mean to House Beautiful, which is gearing up

to celebrate its 100th anniversary in September?

Ms. Black: A better question to ask [House & Garden Publisher] David Carey is how many ad pages he will have next spring, rather than his first few issues when he can bring all the packaging clout of Conde Nast.

House Beautiful understands very clearly what its positioning is. It has a new ad campaign from [Margeotes/Fertitta & Partners] which

asks, "Which house is beautiful?" and we'll continue to market that title aggressively.

AA: You seem to be using advertising more aggressively to market individual titles.

Ms. Black: I'm a big believer in media advertising. We want to keep our brands in front of advertising decisionmakers. We have three campaigns in the works right now or about to break-Cosmopolitan, Town & Country and House Beautiful.

AA: How do you feel about corporate marketing of all titles? It appears that Hachette and, more recently, Conde Nast, have been aggressively marketing their titles from a corporate perspective. We haven't seen as much of that from Hearst.

Ms. Black: I would say that we have opportunities in corporate marketing.

When you look at our 16 core magazines, we reach 43 million women [per month], our home magazines reach 28 million women, men's reach 13.5 million and our affluent group reaches 6 million.

I believe if we can strategically create marketing relationships

with a variety of companies we can grow the business. I think we can do more of it.

AA: What about new media?

Ms. Black: Hearst has a major stakehold in new media...We were one

of the original investors in Netscape and we just took a stake in I/Pro. As far as our involvement with magazines through HomeArts and fashion titles, it is all about research and development.

At this point, nobody can predict with any certainty if we can make these viable, profitable revenue producing businesses.

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