New Hearst Newspapers President: 'Tough Decisions' Ahead

By: Joe Strupp Incoming Hearst Newspapers President Steve Swartz hints at possible cutbacks in a memo sent to employees today, which also announces plans for a "100 Days of Change" program in early 2009, but with few other specifics.

The memo comes a week after Hearst announced the retirement of newspaper division president George Irish and named Swartz as his replacement.

After noting positive programs at various Hearst papers, such as the Albany (N.Y.) Times Union offering a Thursday-and-Sunday-only subscription and several Texas papers sharing features production, Swartz dropped the bad news of likely changes ahead.

"These are historically difficult times for our country and our industry, and our problems will likely worsen over the months ahead. Many companies in our industry find themselves saddled with far too much debt, and a painful restructuring process has just begun, with all the negative publicity that comes with that," the memo states. "We at Hearst benefit from being such a strong and diversified company, but we haven?t been spared the difficulties of a newspaper industry in the midst of a difficult transition. We've had to make some tough decisions over the past couple of years, and we'll have to make more before we've returned this division to a path of sustained profit growth, which we are committed to doing."

He later notes the "100 Days of Change" plan, but with few specifics, other than the creation of an e-mail for suggestions, 100daysofchange@hearst.com, and an eventual Web site for the initiative.

The entire memo is posted below:

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Dear Colleague:

I?d like to begin a conversation with you on the future of our newspaper company.

First, I believe our future involves serving our readers on the printed page as well as a multitude of digital devices, those that exist now and those that have yet to be created.

Millions of people across this country still look forward to spending a half hour or more each morning reading their newspaper, and for those who do, we in many cases haven?t been asking them to pay enough for the service we render 365 days a year.

We must also recognize that there are many people who want to consume our news but don?t believe the seven day print format works for them.

With this in mind, our Albany Times Union has pioneered a strategy of "Power Days," which in Albany?s case means a newly popular frequency for home delivery that involves only the Thursday and Sunday newspapers. In Albany, we?ve worked with our advertisers to make sure that Thursday has the majority of our midweek inserts and coupons from grocers and other retailers. We also moved our popular "what to do this weekend" coverage to Thursday. Sunday of course has the bulk of our feature journalism.

Thus, over the past two years that we?ve offered it, subscribers to the new Thursday and Sunday frequency package have grown to 15,000, giving us home delivery increases in the two days valued most by our advertisers. Meanwhile, we still have 56,000 seven day subscribers, and another 14,000 subscribers who take advantage of other frequency options.

Of course many of our consumers today want to receive their news and information digitally, either exclusively or to supplement their print reading. For these readers, we have our "Web first" approach to breaking news and our great database projects highlighting everything from crime patterns to public swimming pool locations. Our channels on such topics as moms, religion and our pro sports teams have helped boost the amount of time our readers spend on our sites.

We're actively recruiting local bloggers and correspondents to contribute to our hyper-local community Web sites. Our widgets and feeds are starting to make it easier for people to consume our content on their Blackberry, iPhone or Facebook page. And our migration to the new Yahoo advertising platform, known as "APT," will fundamentally change our ability to offer our advertisers quality ad positioning and targeting.

As I said in my letter to you regarding George Irish?s many contributions to our company and our industry, Hearst has emerged as an industry leader. We began the conversations that led to the creation of the newspaper consortium and its relationship with Yahoo and with Zillow. Along with Gannett, Tribune and New York Times Company, we founded quadrantONE as a dedicated national Internet sales force.

We acquired a majority stake in Metrix4Media, a fabulous search engine marketing company that allows our sales forces, as well as others in the newspaper, yellow pages and broadcasting industry to help their clients buy clicks on Google, Yahoo, MSN and other search engines. And along with our colleagues at MediaNews Group, we acquired a majority stake in Kaango, a great free classifieds site that is on its way to becoming our industry's platform of choice.

These efforts at industry cooperation are just the beginning of what this historically fragmented and duplicative industry can achieve if we work together, and Hearst will continue to play a leadership role in these efforts.

There are other promising bursts of innovation across our newspaper company. Early next year, both our Houston Chronicle and San Francisco Chronicle will launch a totally revamped weekend classifieds sections, transforming what have been gray and tiny listings into vibrant color and photo-filled, catalogue-like sections complete with the kinds of data readers need to continue their search online.

Our Houston Chronicle and San Antonio Express-News have launched a project to combine their news feature operations, strengthening our coverage of common subjects like movies, TV and travel while allowing each newspaper to put more focus on uniquely local content.

These are historically difficult times for our country and our industry, and our problems will likely worsen over the months ahead. Many companies in our industry find themselves saddled with far too much debt, and a painful restructuring process has just begun, with all the negative publicity that comes with that. We at Hearst benefit from being such a strong and diversified company, but we haven?t been spared the difficulties of a newspaper industry in the midst of a difficult transition. We've had to make some tough decisions over the past couple of years, and we'll have to make more before we've returned this division to a path of sustained profit growth, which we are committed to doing.

But this is also a time of historic innovation and opportunity in the means with which our journalists can communicate with our audience and discharge our vital First Amendment responsibilities, and in the sheer number of products that our sales force can offer to our customers. We can and we must do more to take advantage of the opportunities before us.

So we're announcing that beginning January 5th we'll launch a program called "100 Days of Change" to sharpen our focus and speed the pace of innovation. Of course we won't get all we need done in 100 days, but we will lay down our blueprint for 2009 and beyond, and we'll make sure each of you has a full understanding of where we want to head and the opportunity to let us know what you think of our course.

We've got a number of initiatives in the works that we'll be telling you more about in the days and weeks to come. Many of the leaders of our newspaper company will head task forces to review our efforts in key areas, task forces that will have tight deadlines and that will report not just to senior management but to all of you. We also need your ideas, so we've established a new mailbox, 100daysofchange@hearst.com, for you to send us your thoughts on how we can make a better newspaper company. This will soon be followed by a Web site so we can all share in each others ideas, get the latest updates on our initiatives, and provide a forum for your comments.

I'd like to thank Frank Bennack and our board of directors for this honor and for this opportunity. My pledge to you is that I and all members of our management team will be communicating with you often, in person, in conference calls and by email.

Thank you all for your hard work and commitment to our business.

Best wishes to you and your families for this holiday season,

Steve