Hearst Corp., is sitting on a $1 billion war chest, insiders say — one reason it has tapped an investment banker as its new chief financial officer.
Mitchell Scherzer, it was announced Monday, will replace Ronald Doerfler, who will stay on as senior vice president of finance and administration
The move is seen to signal a more aggressive acquisition strategy by company Chairman and CEO Frank Bennack, who wants to fulfill the Hearst family mandate to find new revenue streams in digital and non-traditional media. While its newspapers, including the San Francisco Chronicle, have had near-death experiences over the past year, Hearst’s magazine wing has not been hit as hard as Time Inc. and Condé Nast.
While profits are believed to be off, Hearst is said to have revenues over $7 billion and to be profitable — as well as debt-free.
Hearst’s most profitable magazine, Cosmopolitan, was down “only” 17 percent through the November issue. O, the Oprah Magazine, was off 28.9 percent but still holding sway as the second-most profitable magazine in the empire. The sturdy Good Housekeeping, while down 12.8 percent, was still churning out around $20 million in profit.
Flagship magazines at other companies are down 30 percent-plus.
“It’s is absolutely not about cutting costs,” said Reed Phillips, a partner at the boutique investment banking firm of DeSilva & Phillips, of the new appointment.
One former executive said that ex-Hearst CEO Victor Ganzi was pushed out in June 2006 because he was unable to develop a digital acquisition strategy.
Scherzer was an investment banker at Goldman Sachs from 1989 to 2002. At JPMorgan he became the head of the US media investment banking business; more recently he headed the media practice at Silverfern Group.
WARNing
Lawyers are said to be circling some of Condé Nast’s displaced workers.
Condé CEO Charles Townsend, extolled his top executives that “it’s time to get our swagger back” at a recent publishers’ meet ing.
But there may be a few more bumps in the road after the firings of more than 460 peo ple this year.
About 340 were laid off in the period that began with the shuttering of four magazines, including Gour met and Cookie, in early October.
But so far, less than half have been compensated in accordance with New York State’s WARN Act, which gives employees 13 weeks’ notice or the equivalent pay if a company closes a plant or fires more than 250 employees.
Some staffers been in contact with law firm Liddle & Robinson, which specializes in employment law. At least one ex-Condé Nastie is said to be actively considering a suit.
A source said Townsend and Glamour Publishing Director Bill Wackerman met with Condé Nast attorneys to discuss ways to avoid WARN payments.
One source said that since all employees are paid from the same Advance Publications account, it could be considered a single entity under WARN — and the company would have to give full- and part- time employees advance notice if 250 were to be fired. If each magazine is considered a separate profit center, the company may be able to avoid the payments.
Paying extra money to certain employees has incensed the have-nots — even those who agreed to take the standard two weeks of severance pay per year of work.
“Condé Nast has literally cheated every employee fired after Oct. 5 out of their 90 days,” said one ex-employee. “They have played with the law, disrespected employees who worked for them and basically given a big ‘FU’ for their hard work.”
A spokesman for the New York State Department of Labor had not returned a call by press time. A Condé Nast spokeswoman declined to comment.
Going South
Time Inc. continued to lay off staffers at its Southern Progress unit in Birmingham, Ala., headed by Executive Vice President Sylvia Auton.
Southern Progress looks like it will have cuts in the neighborhood of 12 to 13 percent, double the 6 percent being shaved from the rest of the 9,000-employee company.
The corporate library in Birmingham will be shut down, and the remaining 500 to 600 employees will occupy less of Southern Progress’ campus-like setting, a spokeswoman confirmed.
“The goal is to get the staff together, which will im prove the work environ ment,” she said.
Local Web site Mediaof birmingham, pegged the cuts to be “dozens.” It could be as high as 70 people, according to one estimate. The company would not confirm the size of the layoffs.
More than 500 people are expected to be let go from Time Inc.