Hearst Corp. had record revenue and profits in 2024, but 2025 is likely to be a more challenging environment, according to Steve Swartz, the media company’s CEO.
Swartz sent his annual letter to Hearst employees Tuesday, detailing how the company’s various divisions performed. According to the letter, Hearst hit $13 billion in revenues last year, a new record.
That growth was driven primarily by the credit rating agency and research firm Fitch and Hearst’s local TV stations, which benefited from a presidential election year. It was due to those two divisions that “we were able to overcome very challenging business conditions at many of our consumer media businesses,” Swartz wrote.
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In particular, the advertising, print and cable TV business remains challenged, though Hearst is lucky enough to own 20 percent of arguably the most valuable brand in sports: ESPN (Disney, of course, owns the rest). Swartz was optimistic about ESPN’s future growth, but noted that the company is contributing capital to launch the ESPN flagship streaming service this year. Hearst also owns 50 percent of A+E Networks, with Disney owning the other 50 percent.
“It was a tough year for our newspaper and magazine groups and our A+E Networks partnership with The Walt Disney Company, as the advertising market got much more competitive and such sectoral shifts as cord cutting, losses in search-related traffic and competition from generative AI led to lower profits,” Swartz wrote.
“Looking forward, the current environment and our early forecasts suggest it will be difficult to achieve another year of profit growth in 2025,” he added. “Among the headwinds we face is a massive drop off in election advertising at our television stations, as the U.S. holds major elections every other year. This recurring and expected decline is accompanied by an increasingly competitive advertising market that challenges linear television with data-rich offerings from streaming platforms and social networks. The tougher ad market, along with continued cord cutting, is also significantly impacting A+E.”
And the company increasingly views generative artificial intelligence as both friend and foe.
“We made a good start last year training our colleagues on using generative AI to help them in their daily tasks, but there is much more we can do,” Swartz wrote. “In test cases we are starting to see significant productivity gains using generative AI in software programming, sales, marketing, data assembly and HR and we see big future opportunities around customer satisfaction and new customer onboarding in our B2B businesses.
“These efforts are not aimed at replacing our colleagues with machines but at making our colleagues more efficient, allowing more time for much needed innovation around inventing new products and making our existing products better,” he added. “We are already seeing promising efforts by our colleagues using generative AI to help them create new data and media products, particularly at newspapers and in our health group. But lest we see this as all upside, new competitors are using generative AI to enter our markets as well, particularly in health, and generative AI search products are costing our magazines and newspapers valuable digital traffic. We will need to respond.”
While Hearst can trace its origins to newspapers and magazines, its present revenue is driven by TV, and going forward, it will increasingly be driven by B2B business like Fitch and MCG. Swartz wrote that in 2024, the company’s B2B businesses accounted for 50 percent of the company’s profits, up from 15 percent a decade ago.
