Hearst bought A&E to avoid selling at a low price, CEO says
Add Axios as your preferred source to
see more of our stories on Google.
Hearst CEO Steven Swartz speaks at Media Trends Live on Oct. 20 in New York City. Photo: Jonathan Heisler for Axios
Hearst bought out Disney's 50% stake in A&E Global Media because it was a better alternative than selling to a third party at "what would have been a really low price," president and CEO Steven Swartz told Axios at its annual Media Trends Live event in New York City on Tuesday.
Why it matters: Hearst has the balance sheet to make such a move, but its CEO acknowledges that plans for the asset are still in the works.
- Hearst saw record revenue and profits last year, Axios previously reported.
Catch up quick: The 139-year-old media giant bought out Disney's 50% stake in August for $1.2 billion in cash after co-owning the asset in a 50/50 split since 2012.
- Hearst co-founded A&E alongside ABC and Rockefeller Group's Entertainment Channel in 1984. Rockefeller sold its stake to Hearst, ABC and NBC in 1993. Disney acquired Capital Cities/ABC in 1996. NBCU exited its investment in 2012.
Zoom in: Swartz said he thinks Disney "is very focused on what they're doing with Disney+" and came to the conclusion that the A&E networks "weren't going to fit in there."
- "So I think we jointly discussed that one of us should probably buy out the other, just to allow A&E to experiment more, and perhaps move a little faster," he said.
- "We decided it made more sense for us to be the buyer, and so we're happy to own the other half."
State of play: Hearst is working with A&E president Paul Buccieri "to figure out what we can do to bring some perhaps new growth platforms" to the company, Swartz said.
- "We don't have a grand plan, and we're open to all the tools that are in anybody else's toolbox too. As I said, live events, podcasting, and on and on," he added.
Zoom out: While Swartz acknowledged there are pressures on the cable business, he said the media giant is committed to retaining its 18% stake in ESPN. Asked if he would consider selling it, he said unequivocally "no."
- He lauded the NFL, which took a 10% minority stake in ESPN this year, as "not only the best brand in sports — they may be the best brand in entertainment."
- "So to have them come in as partners, we're very excited by it."
The big picture: Hearst has invested in business data, intelligence and software businesses across health, finance and transportation verticals to fuel growth and offset a challenging environment for consumer media, particularly magazines and newspapers.
- To that end, Swartz said the company's fastest-growing business is Bring a Trailer, an online marketplace for vintage cars and a community for auto enthusiasts.
- Asked whether Hearst planned to consolidate any of its magazine brands, Swartz said there's no "ongoing" effort to look at that.
- "Obviously, some of our brands are doing better than others, but they all seem to be contributing right now to the greater good of the magazine company. So we don't have a plan to do a lot of consolidating."
What to watch: Hearst still has a large footprint in local news, with dozens of newspapers and local broadcast stations in its portfolio.
- Hearst recently acquired the Dallas Morning News and Austin American-Statesman to add to its portfolio in Texas, which includes the Houston Chronicle and San Antonio Express-News.
- Swartz said he would consider buying a newspaper and TV station in an overlapping market, though he added it's probably "more economically beneficial to the station to have a second station in the market than a newspaper."
