Frank Bennack, Jr.

Frank Bennack gives the commencement address at the 2010 Commencement Convocation for the College of Communication at The University of Texas at Austin at the Frank Irwin Center on May 21, 2010 in Austin, Texas.

Frank Bennack gives the commencement address at the 2010 Commencement Convocation for the College of Communication at The University of Texas at Austin at the Frank Irwin Center on May 21, 2010 in Austin, Texas.

Frank A. Bennack, Jr. is the chief executive officer of Hearst Corporation, one of the nation’s largest private companies engaged in a broad range of publishing, broadcasting, cable networking and diversified communications activities. He is in his second tenure as CEO and in his first, served as Hearst’s CEO for more than 23 years. He is also presently vice chairman of the Hearst Board of Directors and chairman of the Corporation’s Executive Committee.

Bennack is also a director of Hearst Corporation and a Trustee of The Hearst Family Trust established under the Will of William Randolph Hearst. In addition, he sits on a number of corporate committees and The Hearst Foundation boards where he has served for more than 25 years.

After his first tenure as president and CEO began in 1979, Bennack directed the Company through an unprecedented period of growth, increasing revenues sevenfold and growing earnings to 13 times what they had been, through investments, acquisitions and start-ups. Today, the Company comprises some 200 separate businesses with approximately 20,000 employees.

Under Bennack’s leadership, the company launched with ABC three leading cable networks, A&E, History and Lifetime, plus its investments in the ESPN family of networks. On his watch, Hearst acquired 11 newspapers, including two of the nation’s largest, the Houston Chronicle and the San Francisco Chronicle, two trade publishing companies, three major consumer magazines, a television production operation, various syndication and distribution businesses and multiple television stations. Bennack also led the company into expanded investments outside of the United States. During his tenure, Hearst has launched such magazines as Country Living, O, The Oprah Magazine, Marie Claire and SmartMoney.

Bennack was instrumental in the decision to create what today is Hearst Television Inc., one of the nation’s largest non-network owned television station groups which operates 29 television stations. In 2009, he directed a merger between Hearst Broadcasting and Hearst-Argyle Television resulting in Hearst-Argyle becoming a wholly-owned private subsidiary of Hearst Corporation. Bennack was an original board member of Hearst-Argyle Television, and before being named chairman in 2008 was presiding director. Hearst folded its television holdings into Hearst-Argyle Television in 1997, forming a public company.

Prior to his first tenure as chief executive, Bennack served as executive vice president and chief operating officer of the Corporation and, prior to that, as vice president and general manager of the Hearst Newspaper Group. He also served in a variety of management posts, including a seven-year tenure (1967-1974) as publisher and editor of the San Antonio Light.

Bennack is a director of Polo Ralph Lauren Corporation. He is chairman of The National Magazine Company Limited of Great Britain, a wholly-owned subsidiary of Hearst Corporation. Bennack is also a governor and vice chairman of New York-Presbyterian Hospital and its Healthcare System, a managing director of the Metropolitan Opera of New York, chairman emeritis of Lincoln Center for the Performing Arts, and chairman of The Paley Center for Media (formerly The Museum of Television & Radio). He was the 1992-93 chairman of the Newspaper Association of America (formerly the American Newspaper Publishers Association).

As a teenager, the San Antonio native was host of both television and radio programs. He eventually entered publishing in his hometown, and rose from classified advertising salesman to newspaper publisher by the age of 34.

Bennack has received honors for his charitable work from such organizations as the American Heart Association, United Cerebral Palsy and the Inner City Scholarship Fund of New York. His industry awards include the Gold Medal from the International Radio & Television Society in 1991, the Trustees’ Award (Emmy) from the National Academy of Television Arts and Sciences in 1993, the 1997 Center for Communication Award, the Distinguished Public Service Award from the Advertising Council in 1999, and the 1999 Distinguished Service Award from the National Association of Broadcasters. In 2007, he was elected into the American Academy of Arts and Sciences.

Read Bennack’s interview:

Today is Thursday, May 20, 2010.  We’re speaking with Frank Bennack.

I am Frank A. Bennack, Jr.  I was born in San Antonio, Texas, on February 12, 1933, and entered the newspaper business at 17 years of age after having been a winner in an oratorical contest that was sponsored by the Hearst Corporation and my hometown newspaper the San Antonio Light. And I was one of three winners and three of us appeared, actually I was second, three of us appeared before the Rotary Club in San Antonio of which the then publisher of the San Antonio Light Colonel B. J. Horner was a member.  And following the, all of us giving our orations to the Rotary Club he came up to me and said that first of all the judges picked the wrong number one,  you should have won instead of being second.  And secondly, if you can talk like that you ought to be able to sell advertising.  And so he offered me a job in the San Antonio Light, Classified Advertising Department and I took that job and that was the beginning of what’s more than 50 years.  So when people ask well what drew you to the business?  Like many things in life it was highly accidental although I did have some history.  My father was a writer and artist and his twin brother had been a photographer for the San Antonio Light but I was certainly not focused on doing that until given that opportunity and of course it caused me later in life to go to night school and when in the Army to the University of Maryland Overseas Program, et cetera because I went right out of high school to work on the San Antonio Light.

And 17 years later, at age 34, I succeeded the man who hired me as publisher and in our system I was called publisher and editor because the publishers were also in charge of the editorial side whereas in some newspaper companies that was divided between an editorial leadership at the corporate level and business leadership.  But in our system the publishers were in charge of both so I was technically publisher and editor.   Although I was never a working reporter, along the way my mentor during that period from classified ad salesman to publisher, put me in the newsroom to work very closely with my colleagues there as he did give me a stint in labor negotiations and everything else so that by the time I got to the corner office I’d pretty much done it all.

Parenthetically, what has made my media career interesting is that even before all of this I had a radio show in San Antonio as a teenage disk jockey in my teens and when television came to San Antonio the very first television show was from the Bexar County Coliseum and they recruited quote, talent, end quote, from various high schools to appear on that first show.  And so I was on the very first television show in San Antonio and from that ultimately, and from my radio show got my own television show on Channel 5, which I did for about two and a half or three years live on Sunday night opposite Ed Sullivan so my audiences were not huge but my family and everybody was very proud of the fact that I was a radio and television pioneer before I became a newspaper man.  And so never would I have imagined that I would end up running a company that does all of these things and having had that on the ground training was invaluable.

Cash:  And remind us today which company you’re running and what your title is.

Bennack:  All right.  I am the Chief Executive Officer of the Hearst Corporation which is one of the largest privately held media companies in the world.  We’re engaged in every category of media or certainly virtually every category.  Historically the company started as a newspaper company in San Francisco.  William Randolph Hearst took over the San Francisco Examiner which was owned by his father Senator George Hearst when he was in his early 20s and built the great empire that is I think well-known to many, had 30 newspapers or more at the peak.  Was an early pioneer in radio and in movies.  In fact one of my favorite stories is that he was, he had no idea where his investments in movies was going to go.  It was new technology when he was engaged in it and a business reporter once asked him do you think there’s any money in movies?  And he said young man there’s a lot of my money in movies.  So that shows you that he was an entrepreneur and a risk-taker.  In any event our company started as a newspaper company and then after the turn of the 20th Century became a magazine company.  Mr. Hearst saw a Motor Magazine in the UK that he liked and founded then a magazine called Motor in the US.  And then subsequently acquired Good Housekeeping and Cosmopolitan and Harper’s Bazaar and today we are among, if not the leading publisher of monthly magazines in the world, among the very few largest, primarily however, magazines for women although we do publish Esquire and Popular Mechanics and some general interest.  Most of our magazines are women’s magazines.

When I became the head of Hearst we had three television stations, one with each of the then existing networks, one NBC, one CBS, one ABC.  And ABC, NBC, CBS and today we have 29 television stations so that one of my early inclinations was the need to become more electronic.  We were very heavily vested in print obviously as a newspaper by birth and a magazine company by growth, both of those.  And I undertook to broaden our asset base and over the time that I’ve been CEO moved us from those three television stations to 29.

And also founded with Leonard Goldenson, then head of ABC what are today Life Time and Arts Entertainment, A&E and ultimately out of that combination which was called Hearst-ABC Video we launched the History Channel which is today a very powerful channel and then ABC acquired ESPN in a very early stage and its development and we ultimately became a minority holder of that.  So today what we call the entertainment group our joint ownership with the Walt Disney Company today of all of those channel is among out largest business along with magazines and newspapers.

We’re also in business publishing, business media as we call it because not much of it remains publishing.  Many entries of providing data and information in the medical field, in the automotive field, in the electronic field, primarily digital and online today rather than ink on paper although most of them when we first acquired or launched them were trade magazines and books.  Today that’s all being delivered electronically but that’s a large piece of our business as well.

And of course like everyone in the media world in this timeframe we are heavily into web activities.  Every one of our newspapers, every one of our television stations, has a vibrant website and we have invested heavily there.  Every one of our magazines and we have acquired a group of assets that are solely online and digital assets building that part of our business so that it’s a very broadly diversified both domestically and internationally.

We own a wholly-owned subsidiary in the UK which is a leading magazine publisher publishing many of the titles we have here in the US and some others.  And then we have nearly 200 editions of our various magazines in joint ventures in almost every country in the world.  Mostly Cosmopolitan, there are about 60 Cosmopolitans in the world and Cosmopolitan is almost instantly the leading women’s title wherever we launch it, but increasingly Esquire and Harper’s Bazaar, in some cases House Beautiful.  So we have a pretty large international business in magazines.

Now one of the different things about my career, as we sit here today, I said I was born in 1933.  I’m 77 years old and still running this huge enterprise.  I actually tried to quit.  I retired in 2002—

Cash:  And you had a grand party for it.

Bennack:  Oh, I did indeed.  It’s a famous party that was at Lincoln Center and in which I was given a Woody, 1948 Ford Station Wagon, Woody, in mint condition.  I’d always wanted one and never sprung for buying one for myself and on that occasion the company gave me that but more importantly they gave me the naming of a chair at the University of Texas School of Communications.  And there is a Frank Bennack Chair and I’m very proud of that.  They also gave me a Remington that sits on my piano at my ranch.  In any event, the rest of that story is that I decided that after having been CEO for 23 years and having taken the company to a company that was seven times larger than when I took it over that it was time to live a life with less stress, but also there’s a time for new blood in every organization and I thought it was time to move on.  And so I did retire.  I didn’t disappear because our company is owned by a family trust, the Hearst Trust, and there are 13 of us who are lifetime members of that trust.  When Mr. Hearst died he left his five sons and his eight most senior executives in charge of the trust and it’s a self-perpetuating trust, never can there be more than five members of the family because he wanted to perpetuate the company and family companies tend sometimes to bust up because of the interest of family members, aren’t interested or want to go do something else.  So he insulated against that by putting a majority in the hands of his business associates rather than his family.  And I am one of those trustees today several generations later than that original group.  And so that’s a lifetime position.  That being the case, I kept an office, I kept close to the company after retiring, gave every aid that I could to, I hand-picked a successor who I had recruited to the company and who worked 10 years with me before I turned the reins over to him.  And everything was going swimmingly we all thought.  Then at some point because of the huge changes in the media world the views of my successor and the views of that Board of Trustees were not alike and so as a result of that my successor stepped down and the company decided that for the foreseeable future since there was not an obvious heir apparent, that I needed to come back and that happened in the summer, in June of 2008.  So I’m not soon to be two years in what is euphemistically known as Bennack Two in my second tenure and so now I’ve logged 25 years as Chief Executive.  What I would say about that is that my task has been largely to recruit a new generation of leadership so that even if it’s a good idea it’s never necessary to bring back the old CEO when there’s a change and I’m happy to say that from as divergent sources as Yahoo, NBC, and a variety of other organizations, I’ve been able to recruit out of Wall Street a new CFO from Wall Street, two digital experts one from, actually one from NBC and one from ABC.  And so I’m building a very strong bench and at some reasonably early date one of those individuals will doubtless succeed me.  But for the time being what I didn’t know and the company didn’t know was that within months after I came back the world economy would virtually collapse which made the burden of this second tour much heavier that it would otherwise have been.  But also convinced that Board that the guy who had been a teenage disk jockey and television guy and who had run a newspaper and then all three of those for many years plus magazines and cable networking, et cetera, probably was better positioned to get through these difficult times than someone who was doing it for the first time.  Whether that’s true or not, that extended this current term longer than I expected.  I really thought I was coming back for six months to a year while we recruited a successor but they persuaded me that it’s in the company’s interest that I stay there for the time being.  So that’s where we are right up until today.

Cash: Well considering the dramatic changes in the media that you’ve witnessed and presided over at so many different levels, reflect on  your leadership style and how that might have changed over 25 years, or adapted.

Bennack:  Well, certainly you do change and you do adapt.  I’ve always been very much an activist, more the operating head than the titular head, it’s just my nature.  And therefore in those early days as we made the company seven times larger than it was to begin with I was deeply involved in every one of our activities and prided myself on trying to be as current and engaged in each of those lines of business as the men and women who were running them  because it was a day-by-day job, and was very much engaged, for example, in the acquisition aspects of our business.  During that time we acquired the Houston Chronicle and the San Antonio Express-News and as you heard all of those television stations across the country.  William Morrow Publishing Company, a book company.  And I was deeply involved in all of those.  As we got bigger one learns it’s not possible to spread oneself thin, that thinly and be in everything so that I learned that relying more and more on the division heads and group heads was a smart polity but I never backed away and played the Chairman’s role of simply overseeing.  I was always a partner to the head of the  magazine company, a partner to the head of the broadcast network.  And even in the second tenure that remains the case.  I’m often maybe more active than maybe optimum management techniques would call for but it has so far served me well.  Our company has performed as well as anybody and better than most in the businesses that we are engaged in and have had wonderful growth.

And you pay a price personally.  I’ve worked awfully hard and awfully long hours during my whole career but I do it because I like to do it.  It’s not because someone has a gun at my head.  It’s gratifying to see businesses grow.  It’s gratifying to be at the dawn of cable networking and to decide in 1981 to launch two new cable networks when everyone would have said, in fact many in our company and at our Board level were saying things like we hope you know what you’re doing.   Later they said we really hit the mark didn’t we?  So that’s, but that’s been fun.  And I must say as difficult as the period beginning with the Lehman crash, I guess everybody kind of thinks of that as the beginning of the really deepening economic recession, the Great Recession, as it’s called.  Even during that time and even though we’ve had to do a lot of things that were much less pleasant than one would like such as asking up to 10 to 15 percent of the more than 20,000 people who work in our company to leave, as we had to right-size.  Even with that pain and we miss those people who were alongside us but the health of the remainder of the 20,000 depended on making these businesses work and making them, keeping them profitable and attracting capital.  And so even with that kind of negative emotional aspect the challenge of this last two years has been quite invigorating for me.  I’m not in the least tired of what I’m doing or even tired from what I’m doing because I’m seeing real progress and because I feel good about the people I’m recruiting and the things we’re buying.  We’re in the process as this is being recording in acquiring a company called ICrossing.  ICrossing is the leading search agency in America.  They are a group of small agencies that have been cobbled together for search optimization.  And they’ve worked for Coca-Cola and the Hilton Hotels and some of the largest American companies helping them build their websites and helping them maximize their results from a search.  That’s a whole new world and something that even in my first tenure that by the time I retired in 2002, I would have known nothing about and this time I’m in the big middle of that and—

Cash:  Search engine optimization.

Bennack:  Search engine optimization, exactly, and all of the elements of that including social and all of the sub-categories from Facebook to Twitter, et cetera.  Well that’s exciting for an old guy that started out as a classified ad salesman or even before that with a radio program or a television program called “Time for Teens” on Channel 5 in San Antonio.

Cash:  KENS.

Bennack: KENS.  It was KAYL in those days, KENS today but it came on the air as a store station and the call letter KAYL.

Cash: Well you mentioned how this is a brave new world with terms and analytics that nobody would have imagined 25 years ago when we were doing market research for newspapers.  How are newspapers gonna stay afloat?

Bennack:  Well it’s a very good question and in fact—

Cash:   And magazines as well which are also feeling circulation declines.

Bennack:  They are, but the challenge for newspapers at least the going from a long difficult but not dramatic decline in their positioning to at death door in some people’s minds, really was not a readership problem, it was an advertising problem.  The loss of classified advertising that was the dramatic moment when Craig’s List and Monster and all of these other, Autos dot com, et cetera, started taking that ad base, that accelerated the economic difficulties.  Not that there wasn’t a long-term trend of circulation loss.  Quickly, our view is that the old paradigm of the advertiser paying the freight entirely for newspapers and magazines, 80 percent of the revenue base coming from advertising, will never again occur.  The reader will have to pay a greater proportion of it and we’re finding that possible.  It does reduce circulation when you raise prices but the, our present belief is that a business model which produces more than half the revenue by subscription and circulation revenue plus the web is still a winning and profitable model.  And we’re seeing that.  We’re moving our papers to that. We’re losing some circulations but we’re finding that each new increase in pricing has a lesser effect than the one before because we’re down to a loyal core readership.  And so what you’re gonna see by and large, in our view, is papers that used to be 200,000 circulation are gonna be 140 or 150, but a much more devoted readership base and people are willing to pay their share.  Advertising will still be there and the model, the trick is having sufficient coverage to continue to attract some advertising but not be so heavily reliant on it.  And for the reader to have a greater share in financing.

Cash:  And does that reader share include paywall for online information?

Bennack:  Well it will have a pay-. There will be a paywall for sure in the new devices.  Whether we can roll back the paywall for online, after having made that free, that remains to be seen.  We are all committed to trying to do that but what’s most likely gonna happen is that we’re gonna offer less in the free webs, in the free sites and have paywalls behind that for more in-depth or broader information.  I’m not persuaded that that’s going to be a big deal financially.  I think I’m more of the opinion that charging for the traditional product more like what ought to have been charged all along, plus the new devices, the Kindle, the iPad, et cetera where people will clearly be prepared to pay, that that’s the direction  Now it will be extra and beyond what I personally expect for anything we can get on paywall on web and there’ll be some revenue there but I think it’s more gonna come—  For example, in our San Francisco newspaper where we were in a very high cost market to publish where we were at four-fifty or five dollars a week, we’re now at nine dollars a week in terms.  And each new price increase has had a lesser effect than the one before.  Now it’s painful because as newspaper men we’ve always wanted to say this year’s circulation is greater than last year and the year before, but that’s not a model that will cause newspapers, which I believe they will do, to survive as far as the eye can see.

Magazines, in my view, are less jeopardized because the quality of their presentation so fits advertisers.  The beauty of a glossy magazine for categories like beauty and fashion are hard to improve on and women are wonderful consumers of magazines.  Much better than men and that’s where our business is mainly positioned.  So I feel much more comfortable about the magazine holding its high ground than I do the newspaper, but I believe both will survive but there will be more slices to the pie.  Cable television now has audiences that, in prime time, that exceed the traditional network.  But they’re both going to be around for as long as you and I will care.

Cash: So what should journalism schools be doing?  How can we prepare our students for…

Bennack:  Well it always begins and ends with the indispensability of the product we offer the reader and the viewer.  So what your school, what journalism schools are about, at least for those that are not studying advertising or other elements, for those that are interested in content, it’s maintaining excellence of the contents, serving the constituencies as best they can and that has to be done with fewer people and greater effort by individual.  We can no longer, people who have been in the newspaper business will know what I’m talking about, we can no longer have reporters that produce one story a month.  It’s gonna have to be a much more intense effort.  But it can be done and is being done so the products have to be better, both newspapers and magazines, or for that matter what you put on the screen in broadcasting.  That’s where it starts because if there’s not the feeling that the consumer needs that product eventually you’ll be displaced.  So you gotta start there.  But then also you have to move in the direction of understanding that technology needs to be employed to lower the cost.  That revenue sources are going to change so that you have to have a product the reader will pay for.  And it goes back to the first issue.  So I think that in terms of the schools of journalism that it’s the same as it always was and that is how with integrity and completeness and comprehensiveness can you put out a product that I don’t want to do without, that my day is not complete without.  It’s as simple as that, harder to do, but simple to say.  It’s the play is the thing whether it’s in print of in video it’s what is that content.   And we’re well positioned in Hearst in that regard.

Cash: Thank you so much.

 

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