Dear Employees, "Only connect." There are 352 pages in E.M. Forster's Howard's End, but those two words—129 characters under the limit for Twitter—buried in the twenty-second
chapter of the novel have such power. Even people who have never read it have heard of its message. Forster's novel was published in 1910, but its issues are today's headlines: an increasingly
fragmented society and, at the same time, the emergence of new communication tools, new ways to forge new relationships. "Only connect"—Forster's solution—had all the markings of a
breakthrough idea. It was original, memorably expressed and instantly understood. It cut deep. Content that powerful is as essential for companies—and especially communications
companies—as it is for artists. Of course I'm thinking of the deep emotional and intellectual connection audiences have with our magazines, newspapers, books, websites, and television and cable
programming, and of the profitable business connection our media forge with advertisers and partners. In a time when many are struggling and flailing, Hearst has had a remarkably successful year:
Profits are, not surprisingly, up over the difficult 2009, but are also close to historic highs. We have positioned Hearst for growth, with cash reserves to pursue smart opportunities by virtue of a
strong balance sheet. One of those smart opportunities was the addition of global digital marketing agency iCrossing to the Hearst portfolio this year. A new addition from last year, Food Network
Magazine, continued its trajectory of success this year, as did our cable properties: ESPN dominated its category with platform expansions and programming successes like the NBA Finals and the FIFA
World Cup; A&E had its best annual ratings ever among adults 25 to 54; and History had its best year ever in all key demographics, notably becoming a top five cable network. Hearst Television, which
saw core advertisers return and an increase in political advertising this year, is leading an aggressive pursuit of mobile television through a consortium of local station groups in a joint venture
with NBC and FOX. For me, equally important to the content we present in the marketplace is what happens within our company—how we connect as colleagues. Our businesses now have more
moving parts than any of us could have dreamed a decade ago. And what a varied portfolio we manage! Our 40 percent ownership in the credit rating company Fitch brings great value to Hearst and to the
economy at large. Our health-care subsidiaries, First DataBank and Zynx Health, are poised for stellar growth through multibillion-dollar economic stimulus efforts that support the adoption of
electronic health records. The diversity continues: Hearst's newspapers are selling packages of digital services, such as search engine optimization and social media marketing. To keep up—to
say nothing of staying ahead of our competitors—we need an endless supply of fresh ideas. Where will those ideas come from? At Hearst, great ideas are not a solo act: They are the result of
well-built teams always ready to be flexible and try something new. A gifted colleague may get a light-bulb idea—but executing it alone? This challenge is far beyond the abilities of even
our most creative people. Given the ever-accelerating rate of change, we need to turn ideas into reality crisply and quickly. The genius CEO, the solitary talent, the dominant creator—those
are role models for a bygone time. Our heroes today are harder to name. And their key talents—gathering allies, building agreement, working together for shared goals—are far different from
those we once believed crucial. Our National Magazine Company celebrated 100 years of working together on October 11. That extraordinary team of creative professionals has already set the company on a
solid course for another century of success. Our most productive work begins when we share ideas with our colleagues. When we debate them. Add to them. Refine them. And then, as a team, roll them
out. Our work—our art, if you will—is collaborative. Yes, it is thrilling to watch an individual perform at the height of his or her powers. But while superstars may dazzle, it's only
teams that win. We were fortunate to add some extraordinary members to the Hearst team in 2010, including Magazines President David Carey; a new head of finance at Hearst Television, John Drain;
and the entire iCrossing stable of talent around the world, led by Don Scales. Also, with a feeling of great pride, we bid adieu to Hearst Magazines Chairman Cathie Black this year as she prepares
for her new role as chancellor of New York City Schools. There is no higher priority in America than our educational system, and the willingness to climb into the trenches in the fight for improvement
is something to be greatly admired and supported. Cathie served Hearst with distinction for more than 15 years. Her contributions as both senior executive and Board member will be missed by all of us
who have worked alongside her. In his new book, Where Good Ideas Come From, Steven Johnson puts it bluntly: "Ideas develop faster when they bump into others." That's exactly why we launched
the Hearst Innovation program. This program has two goals: First, it's an idea-incubator, a way for us to consider many more ideas for potential new Hearst ventures. And just as important, it's a
reminder that our company was built on a culture of innovation—and that, thanks to technology, we can bring many more people into that process, at any level that suits their desire and their
schedule. We believe that Hearst really can thrive as an environment that welcomes ideas, no matter how "different" they are. It can be a company that empowers creators, regardless of their rank
and title and department. And it can match ideas and creators to others, so dreams can briskly become businesses. As consumers and advertisers hungrily embraced new display and distribution
platforms—like the iPad—this year, our colleagues from all parts of the company came together to experiment with the development of electronic editions of our publications and other mobile
applications based on our brands. This experimentation is seen in the dozens of magazine apps available for a variety of mobile devices, and in Hearst Newspapers' development of paid and free tablet
products and apps based on our newspapers' local websites. The old chestnut "The harder I work, the luckier I get" still resonates. But I like the way Johnson has updated it: "Chance favors the
connected mind." Our Board Chairman, George R. Hearst, Jr., our entire Board of Directors, the members of the Hearst family and I are grateful for all you have done to create the company's
success. Indeed, it's because our goals have been so clear and our execution so extraordinary that we can think about dreaming more dramatically and creating a brilliant next chapter for
Hearst—and for its employees. In other words: "Only connect." Sincerely, Frank A. Bennack, Jr. Vice Chairman Chief Executive Officer Hearst Corporation December 31, 2010