Behind the Hearst-Spleak Mashup

(MoneyWatch)  Mention the Hearst Corp. and it's tempting to think of a fading media empire, out of touch with new media, Web 2.0, etc. After all, this is the company that owns the San Francisco Chronicle, which has been sinking faster than the Titanic after it met its iceberg.

Hearst also publishes a bunch of magazines, including Cosmopolitan, which was off 4.5 percent in ad pages in Q-1; Esquire, off 8.2 percent, Good Housekeeping, off 1.7 percent, Redbook, off 4.0 percent, and Seventeen, off 4.1 percent.

(Other titles, like Harper's Bazaar and Popular Mechanics performed better, adding ad pages in Q-1.)

In any event, this same hoary old Hearst Corp. is partnering with the fresh young upstart, Spleak, to deliver celebrity "news" via the latter's IM and social networking widget.

Not familiar with Spleak? You can be forgiven -- unless you're a teenage girl. The company says about 100,000 such users use its program, CelebSpleak, daily, exchanging gossip at Facebook or MySpace -- or by sending it to each another via IM or text messaging.

The kinds of "hot news" one acquires in this manner includes today's item that pop star Miley Sirus has a nasty strep throat, possibly caught by kissing various of her co-stars; or the following: "After her nude photo shoot for New York magazine, it seems that Lindsay Lohan can't get enough of being naked in public! Though they only asked her to be topless in her new film, she offered full frontal."

That is courtesy of Hearst's Seventeen magazine, just to show you how this deal works.

So much for the fading giant act. Actually, during the past decade of tumult in the media world, Hearst Corp. has benefited from early investments in new media. One of the company's long-time directors, Will (as in William Randolph the Third) Hearst, was an early adopter and technology enthusiast.

He gave up his role at publisher of the old San Francisco Examiner after a wild ride in the late 80s and early 90s, to join the VC firm Kleiner, Perkins, Caufield & Byers. Will reportedly used this perch to help guide Hearst Corp. into making a number of early, profitable investments.

KPCB turned a $4 million stake in 1994 for around 25 percent of Netscape into one of the first big web IPOs, and its subsequent $4 billion acquisition by AOL. An investment of just $8 million in Cerent became about $2 billion when the optical equipment maker was sold to Cisco Systems for $6.9 billion in August of 1999. In its quintessential move, in 1999 Kleiner Perkins and Sequoia Capital paid $25 million for 20 percent of Google -- today Google's market capitalization, though off from its highs last year, is still around $14o billion.

(Disclosure: Will Hearst is an old friend dating back to my days at Rolling Stone, when Jann Wenner hired Will as the first editor of our spinoff magazine, Outside. But I did not speak with him for this piece.)