Hearst aims for new markets

25 October 2011

NEW YORK: Hearst, the publisher of magazines including Cosmopolitan and Esquire, is seeking to expand its reach in emerging markets, thus helping to counter negative advertising trends in areas like the US and UK.

The company currently produces 20 titles in America and 300 editions worldwide as well as 23 publications in the UK.

It has also bought Lagardère's international magazine arm for $920m, containing 102 titles in 15 countries across Asia, Europe and North America.

As a result, its revenue base in now evenly divided between American and non-US sales, Duncan Edwards, president and chief executive of Hearst Magazines International, told the Financial Times.

"The strategy has been about diversification and not having all of our eggs in one basket," he said. "One of the key reasons for this transaction was to have more international earnings, and have more exposure to faster growing economies."

In evidence of this, Hearst opened an office in Beijing last week, reflecting a belief that China promises considerable growth potential for offerings like Elle and Marie Claire.

"China is a great market to be in the luxury goods business at the moment," Edwards said. "The proportion of disposable income that young women are prepared to spend on something that is high quality or high status is extraordinary."

Concerns relating to piracy and the complications that typically arise when dealing with bureaucracy remain in place, but the overall outlook is positive. "The good far outweighs the bad in China," Edwards said.

Brazil constitutes another primary target, and Harper's Bazaar will be launched in the country in November. Russia, where Hearst runs two joint ventures, Vietnam and Indonesia are also attracting attention.

Several smaller nations have proved of further interest, as shown by the unveiling of editions of Cosmopolitan in outlets from Armenia and Azerbaijan to Mongolia and Dubai.

India, however, is rather more of a "conundrum", Edwards suggested. "It has a population nearly the size of China, but GDP per head is very low, so there are really no luxury products," he said.

An additional idea being explored by Hearst is delivering online-only versions of some magazines remotely for markets such as Nigeria. "You could probably do that from London with an expat editorial team," Edwards said.

Data sourced from Financial Times; additional content by Warc staff