Why Did Hearst CEO Victor Ganzi Quit?
So Victor Ganzi quit as CEO of Hearst yesterday, and with some shades of Jane Friedman's departure from HarperCollins, no one really knows why.
In The Times, Richard Pérez-Peña writes that "Mr. Ganzi’s fall after six years came as a surprise to executives at Hearst and some of its major joint venture partners, and to investment bankers who track the company closely." Likewise, Keith Kelly reported that it was a "move that stunned many inside and outside the far-flung media empire." And: "I am stunned. I am honestly shocked," said one executive to Kelly.
It is Hearst, a traditionally non-leaky place, so the fact it's a surprise isn't much of a surprise. So let's get to the stats. The company still has huge revenues, and magazine revenue rose 6 percent last year. But naturally, these are tough times. Per Kelly:
With Ganzi out, the privately held company, which is believed to have annual revenues of around $4 billion, must figure out to how to survive in the digital age.
Its most profitable segment has been its 20 percent stake in ESPN, which is controlled by Walt Disney Co.
Its most profitable magazine is Cosmopolitan, followed by O, the Oprah Magazine - which is run as a joint venture with Oprah Winfrey's Harpo Productions - and the industry stalwart Good Housekeeping.
But all three titles are suffering this year. In the first half, Cosmo's ad page count tumbled 15 percent to 790. O was down 7 percent to 877 and Good Housekeeping was down 1 percent to 813 ad pages.
As an ex executive with Hearst, this does not shock me. Hearst is made of very good people who lack real individuality. Hearst is like a nice mafia, it is their way or the highway. It's not the "Hearst Way" is an often heard expression. Part of the Kool Aid that is instilled in every employee is the notion that Hearst is a cut above the rest in their ability to run a business. Perhaps that is why some of their recent acquisitions have proved to be such a flop. They all believe if they buy it, it will be better due to their skills. Big and costly mistake. Make no mistake about this, TV revenues are down, Newspaper revenues are really down and the internet is taking a big bite out of the magazine business. Victor was the king of balance sheets and P&Ls, so it is no surprise when the internal math is complete, with all tax considerations, they show a profit every year. Remember, his specialty is tax law.
Frank was a business force, not a tax spin master. They need someone like him to really move this company ahead. Not sure an internal candidate is the way to go if they are looking for real change in value.
Remember the proverbial Publisher's Prayer: "Please, God, if I have to have competition, let it be Hearst."
I was also an executive with Hearst and always found Victor to be an extremely dedicated CEO. During his tenure the company became extremely risk averse and, instead of building great businesses, bought little pieces of potentially good businesses. In the early days they got lucky with properties like ESPN and O magazine (the latter I credit more to Cathy Black) but many of their ideas flopped or were micro-managed into the ground. In the Hearst Management Institute classes one of the things they taught in a leadership session was, to be an innovative company you should not have a lawyer or a accountant at the helm... I thought it was ironic since Victor, who was CEO at the time, was both of those things. Seriously, Victor is a brilliant, dedicated individual and Hearst is a good company with many talented executives and dedicated employees. I wish them both
well.
As a long-time employee of Hearst, I must say the old homestead is not what it used to be. The warm, family atmosphere changed dramatically with the transfer from Frank Bennack to Victor Ganzi, and with the passing of Randolph Hearst himself back in December of 2000. The Big Chill which Hearst has been in the grip of is far less emobodied by Victor Ganzi than it is by the Cathie Black Mafia. One thing Bennack had which Ganzi did not was complete trust by the five family trustees. So going forward he faced a much more trecherous course than did Bennack any time, both because of rocky media economy of the 00s, and because of Black's narcissistic take-over of what it meant to be "Hearst".
Sorry, hit the submit button too soon.
The Cathie Black Mafia took over at a time when the 20 or so magazine titles were still very much in touch with their past traditions and what they offered to their very different buying groups. The covers were different, the paper stocks were different, the major advertisers were different. All that is gone. Under Black, what was a wonderful cornucopia of different magazine worlds has become one long advertorial drone. And to what effect?? Has her approach stanched the web-caused bleeding of the magazine division? No, it has not. It has merely turned the once-glorious and varied magazine division into an obvious, cheap monthly regurgitation of whatever new low the advertisers desire. Nothing brave has been stood up for, nothing historic, nothing truly colorful or brilliant -- all has been leveled.
I believe that Victor Ganzi -- a good and brilliant man -- was caught between the war between the "Hearst Way" past of the company, and its tacky Cathie Black present. A present so represented by that God-awful tower.
Heaven help the Hearst Corporation should they make the disastrous decision to replace Ganzi with Black.