Are you guys picking up audio and mark. I guess its working. We will get you gentlemen shortly. You for joining us. Im jordan worthing, and i have the honor of introducing this mornings very special programmer, a conversation with Chris Matthews and former ceo and executive vice chairman of the Hearst Corporation frank douglas. Millions of viewers turned to msnbc at7 00 , to hear chris deliver his trademark openings to hardball. Butthe roots of his journalism career are actually with first. For over 15 years, i thought it was 12, he corrected me like a journalist, chris was Washington Bureau chief of the examiner and the syndicated columnist for the chronicle after frank bought the San Francisco chronicle and then chris went on to lunch hardball with eight bestselling books. And as everyone knows, chris returned to the air after a brief hiatus recover from Prostate Cancer surgery and we couldnt be more grateful for you to being here today. Ive had the pleasure of working with frank Frank Bennack for the last 20 years. That represents less than half of his tenure with first. As weve been blessed to have frank influence for the better part of six decades, with nearly 30 years as ceo. The franks leadership the company has expanded exponentially including historic partnerships that launched a history channel, lifetime and of course our partnership in espn. Our Television Group expanding from 30 to 33 television stations in our newspaper and magazine groups have built upon their legacies as best in class brands. What my colleagues at hearst, a lot of you here today and i are most proud of is franks moral compass and his focus on the importance of Community Service and the role our business played better the lives of our neighbors. True to form his book leave something on the table highlights the importance of corporate leadership in the communities we serve. I think frank captures the culture of our company with the following passage in the books prologue and ill summarize. I believe there was one northstar and is what you know and how hard you work, its not who you know,its how other people know you and i want to take a page and just say authors, icons and north stars, lets play hardball. Thank you. That meets any Memorial Service i ever attended. One thing is you get to find out who your friends are. Iwant to ask you first of all , hes a hero of mine here sitting to my right. Working at hearst i always did the myth and the legend so iwant you to clarify that. Maybe corrected. The idea i had about you was that in fact when i came back from the peace corps on this big empty jumbo plane before they be regulated, the plane was empty. So citizen kane was playing. That was foreboding on where i was headed but the thing was we all grew up and we said build this empire, hearst built this big empire and the lights began to come out and everybody remembers that picture of the lights going out and it was the ending of the empire and then i heard about you and i heard about you and helen, the family needed somebody like you to come out from outside area to make it stateoftheart and save it. You did that. And in the book you actually point that out. [laughter] with humility. You have one of the hearst grandkids say when are you getting your money mom . And she says from mister bennack. How did you see a way through the changes, the fact that print was going to be challenged and there was new media and you better jump on the board at places like espn . What the headlines should be in the Houston Chronicle today. Thats where i was yesterday. Got to get downtown fast. Just kidding. I always wondered what the losing team right for the headlines, twomore to go for four more to go. I say in the book that bill hearst would kick me in the hall and sayhave you bought anything today . I was buying things right and left. I think the short answer is Companies Like all institutions come to different points of their lives. I happened to come on board at a purposeful time as a whole generation of leadership was retiring because of age. Many of them had worked with Mister Hearst where he almost lost the company during that time as you know. Not in the book but i always like to talk about since arnold has specified it had not that the leadership of advertising. Theres got to be one like that at every meeting. Why did you pick the theme from the stage . Were talking about business. I didnt like it. Anyway, one of the things that helps our company get through the Great Depression was that they were behind in classified advertising in almost every market as many of them were newspapers in the world was moving to morning newspapers as Everybody Knows today along came paper rationing. Which meant all of a sudden we were getting as much paper as the other guys, the big guys and they had to cut back on their classifieds in order to take care of the rest of what the newspaper does and we were able to pick up some of that classified advertising so it lifted at a critical time and i started as a classified and salesman but to go back to your original question, it was a group of us came into authority if you will all at once and we had a huge opportunity that was created, two things were important. One was the will which i thought about in thebook. Where Mister Hearst played 13 people to the trustees of his company, only five of whom were members of his family so that in effect he made the decision to have the Company Survive and live far into the future, not put into the hands of old perfectionist and hes one of those when changes or dies, their lifetime is up one or two resigned and it must be someone not a Family Member to succeed that person and vice versa. So why is that important . We were ready to take advantage of bringing in the best management that we could andwe didnt have somebody or a Family Member saying i want that job. Its the authorities simply red light resided in the trustees and the second thing was that the Tax Reform Act of 1968 required any foundation that held more than two percent of the voting stock or 20 percent of a nonvoting stock to divest of that stock, thats how we got it held by a Charitable Organization but what did that mean that to mark it meant that the foundations Mister Hearst found gave them 136 million which was the last obligation we had to fund them and we were able now to use it to grow the company and to pay very nice dividends i might add to hearst families though both of those things worked beautifully because the Family Support would have been there, but it was really there because they could see we were making progress and dividends were improving. As i say, bill hearst loved every move that we made, every new hire that we made. Putting a guy like jim bellows and was one of the bestknown editors of that era. They loved it and they gave us all the support in the world. And our culture is the answer to it. That is were a company that cares about the employees. You work with each other. We have a singular objective to have the best company we can half and every one of our categories and when people have difficulty in performing in their job we try to help themdo that. We always assume that you change them out, my own experience is that you have about a 75 percent chance of success from within promotion and about 5050 in recruiting. And you need both because obviously if you only recruit, only put people up in the company from within, you miss a lot of knowledge and a lot of experience. On the other hand the companies that rely almost exclusively on recruiting in , there was a learning curve and very difficult to keep pace with that. So these are all a few principles that i just learned. I had no idea what i was doing. I grew up and those who read the book know the great education of my father gave me and the arts and he was an artist and a songwriter and a showman and had he not been for the depression and is taking a Civil Service job, his career would have looked more like mine and it did as a postman so as i savor about 12, he treated me as an adult and watched everything i did and up until his last day, he would say are you doing okay with Mister Hearst . He never would except that i was in charge. Just couldnt be. It was all false area. You write in the bookabout how the Hearst Family which i know is interesting , you said that it works. It does. Theres so many personalities. It works in large measure because the test data mandated this will where the management majoritywould reside. In a manner of speaking itwas mandated to work. And once they saw that that cooperation and support and we got it in spades and still get it in spades, it was i think not difficult for them to decide that this is what the test data wanted. Its working. Where doing fine. We can sell, he worked with will, will is our chairman and i when i was ceo talked regularly with him but steve runs the business and i ran the business and so you start there. Then the other issue in part is that everybody thought that because their name was first they were automatically rich and they were a part of a different society, but it wasnt so until the change and until the Company Started doing well. So i had great admiration and i talk about every one of the chairman and ive worked with every one of them at a different approach to life. They all had great senses of humor and i couldnt say more about them. That family works and today, their unified with us and with management. They have their say, but in the end we have the votes. Let me ask you about some of the decisions you made. Talk about how you want when you percent of espn 468 million and i did the math, one fifth is 36. And 40 billion is eight. Tell me the day you decided that there was money insports . It never would have happened if we had built a relationship. The late leonard goldens and who was the founder really of abc as we know ittoday and i were on the board together. Allied Department Stores and we were together at a meeting one day and we started talking about this phenomenon of cable which changed a business that was really for a better signal of existing entertainment to being a programming source and that we should do that and if we were going to lose all of money, lets do it together. So we did. We lost money for seven years before the accommodation of what is now lifetime, amd and history and during that time of course both leonard and i were hearing from despite supporting boards, its a long time, i hope you know what youre doing. Ultimately they said we really had the mark,didnt we and we did. But i on the specific, espn became an opportunityfor us. Gilmore, my seniormost partner and i decided look, sports is surefire and i got a lot of pushback because the main programming seemed almost tractor pulls at that time. We went to Major League Sports which today is a part of it but you just knew that we know that lifetime and amd were losing money but you could tell it was going to work and thats one of the principles of business. You know this and television. These guys will tell you when you can see a program is working even though its working only incrementally you stay with it and some of the most successful ones, thats what happened. They didnt do great in the early days and we knew this was going to work and of course with espn, it gave us a powerful part of our company. Its today the largest single section of our company and plays the role today that magazines played in funding the expansion that we had initially. You know that a transactional Society Today its more than ever because of the president we have, not getting into his ego in the transactionalsense, everything is show me the money. Cuba gooding although he has his own problems right now everybody does. But this idea of leave some money on the table, you have this moment in the book where you and willard are talking and will i think it was says we should have paid you more. You wrote that down. I didnt have to write that down. I was thinking about what was that all about . Its the title of your book and people go wait, people say get every nickel although he said leave something on the table, this idea of it isnt a complete you know, to the death. Between employer and employee, talk about that. As the name implies it means that the other guy doesnt have to lose for you to win. And you leave something on the table in a transaction, youll get to play another day. If you dont leave something, you wont get to play another day and i learned with all due respect and ive been waiting for a long time to say this to you, the last thing in the world we believe in at hearsts hardball. [laughter] hardball has different definitions. I understand. It does mean clean. I know youre dealing. Anyway but the idea of a transactional society, yousay if you push too hard to get the last nickel in the deal. What does that augur for the future mark. Word gets around. Its a relatively small world and all of us know what other people are doing in terms of transactions and all you have to here is that i just did this deal with soandso and it was next to impossible. We almost couldnt get it done. They didnt live up to their word and so in a small environment like that where youre dealing with, im making this up, two dozen people, you better keep your reputation clean and youd better be known as somebody that recognizes that they need to have a good outcome for this transaction. That doesnt mean that you dont work hard and that you dont try everywhere you can to maximize the return that youre going to get area you may have noticed that the round table, Business Roundtable without a paper which was really unbelievably on the mark which is that the concept that everything go to shareholder value is simply not the right way to approach business. There are communities, there areemployees , there are a lot of people who have skin in the game and all of them need to be considered whereas our law and much of business has gone down the road at your required to ensure that the shareholder gets the maximumreturns. Not all there is to life. Lets talk about newspapers in print because you and i , we talked about papers make a return and how do you justify a somewhat lower return you canmake more money selling whatever . How do you do that . As you know, our newspapers make money. They dont make the money they had at the peak. Interestingly enough the margins are similar to what they were in our better days of the top line is simply not what it was. Advertising and the other part of the equation is that the reader has been asked to pay more. The other day at the texas business hall of fame which i was inducted to a few years ago but i spoke there breakfast and a woman came up to me afterwards and said i live in austin and i take the austin statesman, thats the name of the paper and she said it was sold to the san Antonio Express news is news to us because it wasnt sold to us. We tried to buy and we didnt succeed but anyways, one point was that the price she pays now for the paper to be delivered is double what she has historically paid and its still, she didnt say this, im going to say this, doesnt cover much of the cost of distribution and what it costs to put that product together. So the fleeing of classified advertising was the biggest signal event in all of that. Went to the web and it was a big source of income for newspapers. In fact, it was confirmed to me yesterday there were days in the heyday in houston when there were 115 pages of helpwanted classified advertising in the Houston Chronicle. Hundred 15 pages. And all of that, not all of it, we still have a reasonable business of classified but that was the big change. Shorter answer to your question and that is that its in our dna but we have made it work. Their profitable businesses. Those that we acquired and we keep close tabs on this have paid forthemselves at all times over. Really we look at this as in effect a lot of that is gravy and we paid for it, we got a good return and were doing something that is good for the community and for the nation. So president obama asked me at the gridiron and i say in the book if you only broke even with your newspaper when you continue to publish them . I said we may not be the right people to ask for that because we got a Strong Organization otherwise , but we wouldnt stay in business if were losing a lot of money but you wouldnt get the same answer from an independent publisher who needs capital to stay in business. And of course were down to runs of the market except for a few places but i feel better about it just because there are several things are working that will strengthen and extend the life as far as i can see. One is where doing more and more Digital Advertising and is more and more effective, were doing that in all of our businesses but a combination of getting the reader to pay the correct price, something thats reasonable. Today thats about 12 15 a week. If youre a sevenday subscriber. And holding on and off advertising and building enough Digital Advertising is the formula for today whereas when i was a local publisher we were 90 percent advertising. But think about all the history of it. The morning paper, in philadelphia where i grew up and i used to deliver. It had the biggest roots, i had 115 papers. Everybody read the bulletin, that was the paper but then of course the market closesat three or something or four and the paper have to leave. It was more than that. But the traffic. The evening news on television and it changes society because the bluecollar worker in much of that era went to work early in the morning and came home early in the afternoon and wanted the paper in the driveway when they came home. Now their hours are a lot more like their bosses and so they have moved over to morning papers so its a change in society. Its traffic, its the inability to get a paper that has anything new over the morning paperdelivered. And then the evening news and of course today that is of course punctuated by what you do in huge numbers. I think were the oped page now. You used to go home and read James Kirkpatrick but today you watch meadows or somebody. Or some of the other people , you go out there. But when i find out, this is just editorial, but im telling you, all tv now depends on print. All the news is being done by print. Its roaring. Its roaring the number of tough young reporters in the 30s and 40s who are knocking on stories, breaking all the stories for us. We go to bed , its 6 30 at night. These papers go to press and they put these stories out. They post them. Itsgreat for us because were getting the hottest news butwere not paying for it. Thats right. Were not paying, bezos is paying for it. Hows that going to work out economically in the wrong run . As long as we can make the Business Model continue to work, it turns more on the digital side in any of those other ingredients. If we can grow Digital Advertising and particularly Digital Advertising that has Video Connected with it. The cpms are a lot more attractive if it contains video that is ifits just text. So im very well aware of what you say there and i dont think except for the rare individual that people really recognize what would be lost in the actions of these great daily newspapers. We all rely on and i havent read the New York Times and wall street journal im going to get embarrassed by noon because is going tobring something up as welland people forget , this is a big difference. Its a random access device, you dont know when you open it up what youre going to learn whereas most Online Activity is in pursuit of something specific. Where else would you get that . Where else you get something put on your door . Whos going to read about pakistan to mark nobody unless youre from pakistan and youve got to read the peripheral vision, its what you pick up a newspaper. Ive got a fewminutes. Or you race through it. What you read first in the morning . I usually start with the New York Times. We get three or four, my wife is an even Better Newspaper reader than i am she has a little more time to do it, not a lot more but i usually get to the times but i will say that in my view, the journal has made Good Progress in the job that does and of course you see the Washington Post which is a great part ofit. We looked at about this morning and i dont see that everyday. We get usa today interestingly enough for a number of reasons. Watching it from a professional point of view, is the entertainment stuff, where a Big Entertainment Company area and a do a good job there and i worry about the future of that. An old power bars was the publisher there for a while, larry kramer. What are the economicsof that . Its very tough and in the early days, a lot of people thought it could never work because it didnt have the benefit of the local news budget. Local news and also the future of ourtelevision stations. If we win in the news , we win in the marketplace. That was standing how the networks may fall down, its always important but if youre the leading station market with news, number one you get the political advertising which these days is very important as they want both who are wellinformed. And thats the way they are they to, the stories with all due respect to all of my great broadcasting colleagues the stories are abbreviated compared to what you can learn in a newspaper about a given thing. Local or national, our internet so i think that its a tough fight, but my confidence level is not only high but rising as it relates to our products because were breaking the code on digital. Were getting there. Thats numberone. Number two, weve bought into the fact that youve got to keep that print product at the highest quality. Which magazines, putting the size of the magazine and the quality ofthe paper and printing, thats a formula for going out of business. It may save a few bucks today if you have a strong product and you have a big and growing digital product, i think the outlook is not as dire as some people believe. So you said in your book the print is going to live. I absolutely do. The tricky part there is 20yearolds who, i think my son knows more than i know about whats going on and he never picks up the paper. Know, but you read online whats another challenge that we have, a lot of what hes reading originated in the daily newspaper. So our answer to that is the digital side. Its being a player and in many other markets, and this is true of newspapers all over the country. Many of our markets, our websites are the leading websites in the market. For television stations strive for that as well and if you can do that and youve got a local staff that has entrepreneurial tendencies and is willing to step up to these top stories, theres a place. Now, the numbers of who do read the paper have declined materially, theres no question. Theres ill and ill bet you if you did a survey here, the majority here read and prefer the paper version. I have them all, many of you have them all. If imtraveling i can get online onmy devices. If im home , i love the paper and the biggest frustration i talk about in the book is that my wife is such a good newspaper reader if she get to it first , what comes back to me is notfolded the way it came up. And stuff is torn out and what shows the value of it with you. Downton avenue the first scene is that always ironing the newspaper for the family. I once worked next to an executive secretary whose iron is correspondence. Every letter that you unfold she would iron it was all straight before she put it in the file. You wouldnt write that book. Iron your correspondence. So leave something on the table and ithink your values , i get the sense that honesty is a key and taken for granted here and loyalty and your loyalty to the company, the family, the fact they trust you on all these grounds that they turned over their legacy, their future, their identity to you and youve given them back all. Im grateful and its been a great run and i told will i wish you had paid me more to but ihave no regrets. Do you want some questions . Its a small group and i think we could do this fast. A couple minutes from a different point of view. We will open it up to questions, wait for the microphone that we can all hear you. Are you worried about too much opinion on that fact . Does that bother you because its definitely getting more torrential. In media at large . I guess so. I wouldnt isolate that as among the biggest worry because most americans have views of their own and that has led us to more polarization then we all wish for in a society. I worry about that, i worry less about opinion and how opinions are prosecuted by the people who have them and the unpleasantness that comes outof it. I think that is toxic and i think its doing to society something going to have to find a way to recover from but the opinions themselves are valuable because believe it or not, we all find a few opinions that are better than her own in a lot of subjects in life and if you open your ears and listen and are not afraid tochange your mind , youll geta lot of value out that. Whats the place for philanthropy in the survival of local newspapers after mark i was in a city newspaper for a while and small papers, so a very wealthy guy just set up, ill bankroll it. Its great if you happen to live in an area. Where theres philanthropy or what jesus has done with his great fortune, buying, the Washington Post. There is a trend and there have been a number of groups, partly because some of our best journalists lost their positions as papers closed. And they put together groups that allowed other sources and we still get a fair amount from those sources. In our commercial interests. And theyre always looking to publish with us or with the other papers. I think theres more opportunity probably although im glad for that saving of that talent that those organizations have put together but i think a greater trendline and it isnt only here is people who have done exceedingly well in society and who believe that its important to keep newspapers alive and moving to do that. And there are a number of those instances and i think there will be more. So you mentioned the importance of Digital Advertising and im thinking about yesterday , mark herberts testimony and the Silicon Valley mindset isnt always of lets leave something on the table and im just wondering, how you view these new entrants that arts traditional media but yet have become a great distributor of both traditional content as well as new forms of information . I view them with a certain amount of alarm. And im sure any thinking person does. Some of the book is devoted to feeling that if a company that runs on algorithms can ever have a human dimension and a human side and companies that take delight in coloring outside the lines and not being regulated and he is getting his shellacking but whether it will change anything materially remains to be seen. They are so powerful and never would have believed in six years in business that our government would have allowed those two or three firms to get the size of a half. With zero interference. When we couldnt even buy a competing newspaper that was losing money without spending time and in hearings and so on so the system hasnt protected the people and i think washington knows that. Whats the endgame is, they are all powerful and importantly as users we all like them. We all find theres a utility, at least a certain portion, im not living on social media a lot of people are. One said the other day that its a little different than ive ever heard but we may come to look at this era as the era and those businesses the way we look at cigarette smoke. Which is a pretty powerful thing to do. The one thing about working for papers is what you love is friday night, 6 30 and your editor says just two questions. And you go okay. And otherwise were pretty good area tonight will get there but most of the social media, it has nobody editing and theres nobody saying thatthe fact or check this out. Who says as you talk to, whos that a. Is this real. You have to go through that and its a wonderful process because confession, youre done. Its over but theres no process like that. People just say i hear crap. And you know, somebodys got to live with it. How do you quit editing into this new world . I dont know anybody in whatever they do that doesnt need an editor. Let alone. And rand needed an editor bythe way. The objectivists. Theres another point in the book, the name of the book is leave something on the table thats available wherever one buys books. But one of the messages i thought urgent to deliver was the role that local newspapers and local television stations play in Building Communities and cities. And i used several examples in there. Damon carter at Fort Worth Texas and its indisputable that city is west texas and at one time the largest circulation inthe south. Everything from Texas Tech University to businesses that came to that community were influenced by that individual. And so thats also a story of america is how the great little different from citizen kanes message, i always remember because bill hurst as you know was brilliant when offers junior, very funny guy and i remember him saying, we were talking about citizen kane and he said there are a lot of movies i havent seen, i havent seen that one. You believe that, i got a bridge i got to show you. But these things about synergy, you know he was telling the sox stated below, have you heard that . People have an obsession with that crazy facebook thing out there, the crazy people. Its a religion, its not anything like that, its the sox. And the data apparentlydrives people. They got to get up and read the globe every morning, to get all the latest about the baseball team. I wonder about these things. Is nothing like thatanywhere else. Are broadcast people would say we do a weekly rundown of the 10 largest highest rated shows on television and on cable. And over the course of a year , dominated by the nfl games in terms of the Academy Awards and nfl games. Its just incredible consistently, and similar to want Television Area now today interestingly enough, Rachel Maddow is there. In terms of the highest rated shows of the week. On cable but sports is powerful and i think people learn fromsports. Undoubtedly you participated in sports in your. You think about teamwork and you think about honesty and i think its valuable. Plus, our lives can be complicated and its a lot of fun for me to come home and watch my spurs or watch the Dallas Cowboys drive me crazy about two thirds of the time whichi love to do. And its a way of letting off steam. And some people as you say, its a blanket. Its power. Some of our television colleagues are here today and can you share with the group the fact of the matter is that the company got into the Television Business in 1948 but in the mid80s , made some transformative decisions to make the group bigger with acquisitions in kansas city and boston and i think if you could share that with the group. There was a single thought that i had and i got the carter office, it was we need the electronic and at that point in time1979 , that was elevated and we had three stations, one from each of the networks and so i immediately started scouring the country to see where i might buy additional stations and for a time you can on five dhs stations and you dont do it uhf stations so we moved up to the limits quickly and then began a horse as they change due to other, to acquire the properties. The biggest of course was a boston wcvb. The abc affiliate i guess is probably still the biggest nonnetwork owned affiliate station or certainly among them. Crime is not the same as it once was but we absolutely had to go there and we hired alan to come and work with us and help us decide was this a good move . Was it a good place to spend our money and you can imagine , i got some looks askance from the print establishment in our company as the money was making started by television stations. And then when we dared go into cable, the broadcast , were ready to lynch me. But it all worked and now we are all on the same page but thats succession, the dayton, kansas city, boston and then of course on and on after that. And we even in a couple of instances decided to address because we were buying stations close enough that they overlap from a practical standpoint and we had dayton was one of those that we had to divest out but i love doing that. Going to those markets and deciding that you could buy that television station. And then watching them. I think the palm beach is one of the Great Stories that we had. A station was nowhere when we bought area those guys made it something. This is been great. And im going to be a leader. And. Friend. I will tryto jam you on my show one of these nights. You wouldnt believe the pressure. In our business now, cnn, its like tucker, they get up and its some carnival line cruise ship down in the gulf of mexico thats overflowing and thatswho they ride with. They dont ever get off that story. And now theyre onto impeachment, were on to impeachment. Every night its like theres one or two new sources, theres all only one or two bits of news you talk about and its dreadful but people, ive got to tell you, they cant get enough. They want the fire hydrant in their mouth. We actually thought that that would calm down some. At the election. We knew this was going to go on with out of character donald trump is and the nature of thatelection. And of course, it isnt lost on us that it has eroded for everybody else because of the number of people watchingnews. And im guilty area im guilty. She leaves the room becauseif she faced she hollers at the television set. I used to tell young press secretary id say do radio because its hard to get on television especially in abig city radio, they have to refresh every two hours. I forget the name, we had take something, give it to them and theyll put iton the next two hours and now its every second. Its unlike everything ive ever seen. Donald trump didnt create but he belongs there, thats where he is. This election has been crazy again and i hope were not more divided next year after the election. I fear whoever wins, weare going to be more divided. Perish the thought but i do remember at least one governor and maybe there were more either he or his wife would leave the Governors Mansion after losing the election