Hearst Trims TV Business

Jun 16, 2003  •  Post A Comment

Series and telefilm producer Hearst Entertainment, home of syndicated lifestyle programs such as “B. Smith With Style,” confirmed late last week it will exit the telefilm business and hand off its domestic distribution rights to Tribune Entertainment and international rights to Lakeshore Entertainment.
The company will restructure operations, leading to layoffs within the division. Hardest hit will be the telefilm team, all of whose members have been let go. Tribune Entertainment and Lakeshore will oversee the Hearst Entertainment program library, comprising more than 250 movies-of-the-week and feature films as well as approximately 1,000 episodes of live-action series. The distributors also will take over current Hearst Entertainment series “Famous Homes & Hideaways,” “Ron Hazelton’s HouseCalls,” “Pet Keeping With Marc Morrone” and the “Marquee” franchise of movie packages.
Analysts quickly speculated on the meaning of the move, and what it means to a larger Hearst Corp. strategy in the era of consolidation.
Some speculate the company may try to distance itself from the TV production business to focus more resources on its publishing business. The speculation springs from a string of moves among Hearst’s television divisions, including the shuttering of sibling rival Hearst-Argyle Television’s Boston production facility earlier this month.
Due to the closing of the facility, production responsibilities for Hearst-Argyle’s series “Rebecca’s Garden” has been taken over by Scripps-Howard Broadcasting; “Wild Moments” shifted to Weller-Grossman; and occasional show with NAACP President Kweisi Mfume, “The Remarkable Journey,” is now produced by NBC Enterprises’ “Access Hollywood” production team.
“After many years, we are reluctantly exiting the TV movie production business. Although in the past this has been a good business for us to be in, current order patterns and reduced license fees have made this a much less desirable business than it used to be,” said Bruce Paisner, president of Hearst Entertainment.
Hearst Corp.’s television interests comprise not only the syndication and telefilm producer Hearst Entertainment but also partnerships in cable outlets such as Lifetime, ESPN and A&E. Hearst’s publishing assets comprise 12 dailies, including San Francisco Chronicle and Houston Chronicle as well as monthly consumer magazines such as Esquire, O, The Oprah Magazine and Cosmopolitan. Hearst Corp.’s umbrella also includes 34 Hearst-Argyle local TV stations covering 17.5 percent of U.S. households. The station group includes a programming unit and the recently closed Boston production facility.
Sources familiar with the Hearst strategy insisted that the moves within Hearst Entertainment and Hearst-Argyle are not directly connected, but rather that the actions of both companies were driven by an economically difficult environment.
One analyst praised the move, saying the streamlining positions the company well for whatever it decides to do, whether it is to more finely focus its strategies, expand its station business or make myriad other moves.
Following the Federal Communications Commission ruling lifting the ownership cap, the company’s television stations have been the constant subject of takeover talk. Some say the group might be looking to expand by purchasing or swapping stations. Hearst-Argyle also could be targeted by larger companies looking to bolster their portfolios.
“Let’s face it, Hearst and all its divisions are players in the `new corporate’ era,” said one analyst. “They need to decide where they’re going and if cutting overhead such as Hearst Entertainment helps the cause then that’s at least a plan to work with.”
The analyst said that Disney in particular was hungry for the company but remained cautious due to its numerous alliances with Hearst. Eighteen of the Hearst-Argyle stations are, for example, ABC affiliates, and Disney and Hearst are partners on Lifetime, ESPN and A&E. Gannett and NBC have also been mentioned as companies that could eyeball the station group. Hearst-Argyle has a running alliance with NBC Enterprises and Gannett for syndication broadcasts. Eleven of Hearst-Argyle’s stations are NBC affiliates.
“It would, of course, be a natural fit for us,” said one ABC source. “But we must tread slowly and make sure not to overpay. Let’s just say it could be a while before anything even begins to move, so who knows what could happen?”
A Hearst Corp. spokesperson could not be reached for comment.
As for Hearst Entertainment’s latest moves, the distribution deals with Tribune and Lakeshore will last 10 years and will prove to be a boon to Tribune, according to company president Dick Askin.
“For us it’s all good news, because a good, solid library is the backbone of a healthy distributor,” he said. “Hearst has been one of the premiere niche players out there for a weekly series and in a lot of ways this is a logical progression in their relationship with us.”
For the past two years, Tribune Entertainment has exclusively been responsible for all barter sales on behalf of Hearst Entertainment’s programming as well as the management of key “back-office” administrative and operational functions for the company. Both organizations also have collaborated on program distribution and marketing strategies for the entire Hearst Entertainment program library.
Tribune in recent years has reinforced its bottom line with alliances, such as last year’s pact to handle FremantleMedia’s series.
“We’re taking a huge step up for us, as this was one of the missing ingredients we needed, a significant library to diversify our revenue streams,” said Mr. Askin.
While Hearst is getting out of distribution and telefilms, it will focus its production efforts on the reality series business and maintaining its animation division. Hearst produces nearly 100 hours per year of reality programming, primarily for the major cable networks. Current productions include “Modern Marvels” on the History Channel; “Makeover Mamas,” a new series for A&E; episodes of “Biography” for A&E and of “Intimate Portraits” for Lifetime; and “Superhero Science” for Discovery.
Hearst Corp.
Top Executives: Victor Ganzi, president/CEO; David J. Barrett, president/CEO, Hearst-Argyle TV
Revenue: $5.2 billion
Broadcasting: Hearst-Argyle Television (66% owner): 34 stations (one UPN, two WB, one CBS, 11 NBC, 18 ABC affiliates and one independent); radio: WBAL(AM) and WIYY-FM Baltimore; syndication partner with NBC Enterprises; Hearst Entertainment
Cable Programming: 50% of Lifetime Entertainment Services, including Lifetime Television, Lifetime Movie Network, Lifetime Real Women (joint partner with Walt Disney); New England Cable News (partnership with Comcast); 20% of ESPN; A&E Television Networks, including A&E Network, History Channel, Biography Channel and History Channel International (joint venture with NBC and ABC)