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Hearst, Apple Strike a Deal... Not a Great Start for The Daily...

Hearst has struck a deal with Apple that will make it the first big magazine publisher to sell subscriptions for its digital editions on the iPad.

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POLISHING AN APPLE: Hearst has struck a deal with Apple that will make it the first big magazine publisher to sell subscriptions for its digital editions on the iPad. A Hearst spokeswoman confirmed on Wednesday that the publisher will sell iPad subscriptions for Esquire, Popular Mechanics and O, The Oprah Magazine through the iTunes store starting next month with the title’s July issues. The subscriptions will cost $19.99 a year, or $1.99 a month.

It’s a big breakthrough. For the last year, magazine publishers have been pushing hard to get a subscription deal done with Apple, but to no avail. In mid-March, Condé Nast director of editorial operations Rick Levine seemed to express the industry’s frustration when he said, “We frankly don’t want Apple to have a stranglehold on this business.”

Apple wants a 30 percent cut of any subscription sale completed in the iTunes store, and it also has the keys to consumer data. Publishers have said over the last few months that there won’t be any real money made in the digital magazine business until subscriptions roll out so they can get their hands on that data.

And how did Hearst fare in this deal?

“I can’t discuss the terms, obviously,” said the Hearst spokeswoman. “But it’s not their standard deal. It’s fundamentally different than any other deal they’ve offered or struck. We came to an equitable and fair agreement to owning customers together.”

She declined to elaborate.

The spokeswoman said the deal goes beyond magazines. Hearst’s newspapers — such as the San Francisco Chronicle and the Houston Chronicle — also will have subscription agreements for iPad editions in the next two to three months. Likewise, Hearst’s TV properties will be included, though she wouldn’t be more specific. The Wall Street Journal reported the news first Wednesday on its Web site.

With Hearst now officially in bed with Apple, this raises the stakes for Condé Nast and Time Inc. to get a deal done. Single-copy sales for digital editions continue to sell poorly, though earlier this week, Time Inc. came to an agreement with Apple to allow print subscribers to get its iPad editions for free.

— JOHN KOBLIN

NOT A GREAT START: Speaking of Apple and media, Rupert Murdoch’s iPad-specific newspaper, The Daily, lost $10 million in the first quarter, said News Corp. chief operating officer Chase Carey on Thursday on a first-quarter earnings conference call.

Murdoch said in February that News Corp. had invested $30 million in project. The Daily launched on Feb. 2 on Apple’s iTunes and has been charging users 99 cents a week since late March.

A News Corp. spokeswoman said there have been roughly 800,000 free downloads of the Daily app. It is not clear how many subscriptions have been sold thus far. Overall, News Corp. said net income fell 24 percent in the quarter to $639 million on a 6 percent decline in revenues to $8.26 billion

— J.K.

NOT FOR SALE: On a call with investors on Wednesday morning, a representative from BAML asked Time Warner Inc. chief executive officer Jeff Bewkes to answer the perennial question: Does he have plans to sell the company’s publishing division, Time Inc.? “We don’t feel the need — absolutely not — to change any of the asset mixes,” Bewkes said. “We feel that publishing is a very strong performer relative to its competitive set, and it’s undergoing a pretty interesting upside with the tablets coming along.”

Time Inc.’s operating income was up 26 percent, to $63 million, for the first quarter, while the division cut $15 million in expenses. The company maintained its leading share of the American print-advertising market in the first quarter — 21.2 percent, according to the Publishers Information Bureau. Subscription revenue for the print magazines dropped by $17 million, while other revenues grew by $13 million.

Bewkes didn’t say anything on the call about Jack Griffin, the Time Inc. ceo he hired, then fired, or the search for Griffin’s successor, who is scheduled to be named at the end of this summer. In the meantime, Time Inc. editor in chief John Huey, general counsel Maurice Edelson and chief financial officer Howard Averill continue to steer the company. Averill’s name has been bounced around as an internal favorite. Outside the company, the Heidrick & Struggles International-led search will likely include Jack Haire, who logged 28 years with Time Warner Inc. as, among other things, the publisher of Time and president of the Fortune/Money Group, before leaving to accept a job as the president and ceo of Parade.

— ZEKE TURNER

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