Hearst Diversifies Revenue With Fitch Group Acquisition

In his letter to Hearst employees, outlining the company’s 2017 performance, president and CEO Steven R. Swartz stated: “The media landscape is not promising to get any easier in 2018, but I can’t imagine a company with a stronger team, a stronger and more diversified collection of businesses, and stronger balance sheet ready to meet these challenges.”

This came as the company finished another profitable year, seeing growth across areas in its business media group and music holdings.

One of the high points was the performance of Fitch Group, which Hearst had invested in previously, acquiring all but 20% of its holding by the end of last year.



In 2006, Hearst acquired its first bit of Fitch Group, increasing that holding to 80% in 2015. Yesterday, Hearst announced that it had completely acquired the global financial information services company from parent Fimalac S.A., making Fitch Group Hearst’s largest wholly-owned business.

The transaction was valued at $2.8 billion.

In his annual letter, Swartz noted that one of Hearst’s successes of 2017 was “a gain on the sale of our investment in FIMALAC,” adding that Fitch saw “record revenue and profit and grew market share in its core ratings business, thanks to continued investment in strengthening its outstanding fundamental credit research and analysis.” 

According to Swartz, the global bond market was very healthy in 2017, and companies were more willing to issue more debt, much of which carried a paid Fitch rating. Fitch Group is comprised of three core businesses: Fitch Ratings, Fitch Solutions and Fitch Learning.

Recently, Fitch Group expanded its own revenue streams, seeing 20% of its annual revenue come from data products unrelated to its paid ratings. 

Fitch president, CEO and group head of Fitch Group and Hearst senior vice president Paul Taylor stated: “Hearst and Fitch share a commitment to innovation and helping clients utilize information to make smarter decisions. We are excited to continue growing Fitch’s ratings, solutions and learning services businesses, and to work even more closely with colleagues across Hearst’s divisions.” 

Hearst, which holds 360 businesses across media, information and services, has become one of the most highly diversified companies, leading it to continually turn a profit —2017 was its seventh straight year — while still maintaining a stronghold in publishing. Their model is sound.

Swartz’s letter to employees showcases how deeply Hearst is committed to diversifying its revenue streams and looking beyond the typical areas of expansion and investment.

With this latest buy, giving it complete control over a successful financial holding, Hearst is illustrating its commitment to long-term staying power in a marketplace where the game is forever changing.

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