Hearst Corp. Has Gained Vigor by Changing Focus : Media: In the past decade, the firm has shed many of its money-losing papers and become a modern media conglomerate.

NEW YORK — It wasn’t so long ago that Hearst Corp. was seen as the stodgy old man of the media world.

The company that William Randolph Hearst founded in 1887 was burdened with troubled newspapers in central cities and run by a management whose highest goal, many outsiders felt, was to cling desperately to the faded glory of its past.

In this decade, the New York-based company has moved with a new vigor. And ironically, the closing of the Herald Examiner--the sad step that Hearst so long resisted--marks a major milestone in Hearst’s transformation to a modern media conglomerate.

The privately held company that shut down or sold newspapers in New York, Boston, Baltimore and other cities has now apparently disposed of its last money-losing paper. What remains is a $2-billion-a-year conglomerate with 13 money-making newspapers, including the San Francisco Examiner, Houston Chronicle and Seattle Post-Intelligencer; a widely admired collection of 14 consumer magazines, including Good Housekeeping, Cosmopolitan and Esquire; a chain of six television stations and seven radio stations; book publishers; cable programming ventures, and other media holdings.

“Hearst had a great reluctance--a noble reluctance--to take this step,” said John Morton, newspaper analyst who heads a firm of the same name in Washington. “But for all that, they’ll come out of it looking pretty healthy.”

From the 1950s until nearly the ‘80s, Hearst was run by Chief Executives Richard E. Berlin and John R. Miller, who were financially conservative and strongly influenced by Hearst’s heirs. They saw their task as hanging onto the nationwide chain of Hearst papers that in the 1930s claimed 15% of all U.S. newspaper circulation.

The Hearst empire included many evening metropolitan newspapers that suffered as the wealthier readership left the central cities for the suburbs in the postwar decades. In the early ‘60s, the chain was in frail health, an experience that may have persuaded Berlin to avoid the risks of diversification.

Hearst’s style began to change with the ascent of a new chief executive, Frank E. Bennack Jr., in 1979. Bennack, a Texan who ran the San Antonio Light before taking Hearst’s top job, apparently had a new measure of independence from the Hearst family.

In Bennack’s tenure, Hearst has spent what analysts have estimated at nearly $2 billion to acquire new businesses, including magazines, television and radio stations, and book publishers.

Today, while about 15 Hearsts are employees or directors of the corporation, only one, Publisher William Randolph Hearst III of the Examiner, runs an operating unit. Since the mid-1970s, the company has been owned by a trust, which is overseen by a 13-member board that includes five Hearsts.

The family’s fortune has been estimated at nearly $4 billion.

Advertising Age magazine, the only source of estimates on Hearst Corp.’s revenue, reckoned last summer that the company was the ninth-largest U.S. media company, with nearly $2 billion in 1988 revenue. Of that, $689 million was from newspapers, with $919 million from magazines, $263 million from broadcast properties, $15 million from cable TV and $100 million from other sources.

Under Bennack, the company has dealt with two other money-losing papers by selling the Boston Herald American to media lord Rupert Murdoch in 1982 and by closing down the Baltimore News-American in 1986. Hearst turned the Seattle Post-Intelligencer into a money-maker by entering a government-blessed joint operating agreement with the Seattle Times that allows a merging of the competitors’ business and production departments.

(In 1965, during the Richard Berlin era, Hearst guaranteed that the San Francisco Examiner would remain profitable by entering a joint operating agreement with the San Francisco Chronicle.)

While Hearst officials have insisted on keeping their financial results secret, they have disclosed that even before the Herald Examiner’s shutdown, newspaper operations accounted for less than one-third of the company’s revenue.

That isn’t to suggest that they necessarily plan to pare newspaper operations further. In March, 1987, to the surprise of some, Hearst purchased the Houston Chronicle in recession-weary Texas for $375 million and thus took on a battle with the Houston Post. The Chronicle has gained slightly in circulation over the past four years, rising to a current daily circulation of about 428,000. The newspaper is now profitable, analyst Morton believes.

All may not be so rosy in San Francisco. There are rumblings that the heirs of the family controlling the Chronicle may want to pull out of its joint operating agreement with the Examiner that is currently slated to run until at least 2005.

The Examiner also continues to lose readership. The paper’s daily circulation was averaged about 135,400 papers for the first six months of the year, down from 142,000 in 1985 and from 300,000 when the joint agreement was signed in 1965. The Chronicle’s daily circulation averaged about 556,000 for the first six months of 1989.

Hearst’s magazine group continues to hold the respect of competitors. The group has demonstrated an ability to spin off new publications that extend the value of its magazine franchises. Two years ago, the group came out with Victoria magazine, a woman’s magazine aimed at the socially conservative audience that reads Good Housekeeping.

“They have a very strong lineup and know how to keep extending it,” said Nancy Smith, director of media services at the Young & Rubicam ad agency in New York.

Also in 1987, Hearst bought Esquire, the much-traveled men’s fashion and literature magazine, and breathed new life into it.

Among the group’s best-known executives are Helen Gurley Brown, editor-in-chief of Cosmopolitan, and John Mack Carter, who is editor-in-chief of Good Housekeeping and oversees Hearst’s magazine development efforts.

TOTAL 1988 MEDIA REVENUE: $1.99 billion

In Millions: Magazine: $919 Newspaper: $689 Broadcast: $263 Other: $100 Cable: $15

Source: Advertising Age

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