Harte-Hanks a Texas-size communications chain
San Antonio — When it's not joining other news media chains that are buying the hometown newspapers of cities around the United States, Harte-Hanks Communications is trying to find more effective ways to hang plastic bags on doorknobs.
The San Antonio-based company started 60 years ago as a group of small Texas newspapers. Today, it is perhaps the only media company to have a stake in every phase of mass communications. It has daily and weekly papers in several states, 4 television stations, 6 FM and 11 AM radio stations, and 6 cable-TV franchises. It also publishes free advertising "shoppers" in many cities, owns an alternative magazine distribution channel, and marketing companies that can send out coupons, product samples, and surveyors to monitor people's tastes and buying habits.
Using computers to keep up with consumer whims, Harte-Hanks president Robert B. Marbut hopes to break the so-called "mass market" down into as many segments as possible and give people the information and advertising that most closely suits an individual's needs.
"He's developed a new business," John S. Reidy, an analyst with Drexel Burnham Lambert in New york, said of Mr. Marbut. "He's made a combination of a lot of other businesses that already existed." Harte-Hanks has looked at the question of how an advertiser communications with a consumer, apart from radio, television, and newspapers, and developed a product to answer that question, Mr. Reidy says.
In developing his product, Mr. Marbut, who was in college in the 1960s, has gone back to that era for some of his ideas.
"Many of today's adults," he notes, "have values that were started in the '60 s People wanted to 'do their own ting,' to say, 'I'm an individual.' Today we're seeing a segmentation and fragmentation of the marketplace that reflects this idea of being an individual." The media have begun to reflect this trend in the growth of specialty magazines.
"With newspapers and shoppers, we're trying to do the same thing the magazines are doing," he says.
Combined with this focused editorial-advertising approach, Harte-Hanks has become an aggressive acquirer of broadcast stations, newspapers, and marketing companies throughout the US. It has also made Harte-Hanks a closely watched company by investors and by people interested in the future direction of the media.
The company had revenues of nearly $243 million in 1979, a 32 percent increase over 1978. For the first six months of 1980, revenues stood at $141 million. In 1979, the company earned $19.2 million and its earnings per share jumped 20 percent, to $2.07.
Media-watchers have been interested in the company's movements into newspapers and marketing -- particularly its emphasis on smaller cities.
"We con't have any papers in a city larger than 350,000," Mr. Marbut notes. This policy means Harte-Hanks newspapers can be found in towns like Buchanan and Tallapoosa, Ga.; Gatlinburg and Sevierville, Tenn.; Stuttgart and Searcy Ark.; Corsicana and Paris, Texas -- as well as Paris, Ark.
Harte-Hanks's reasons for keeping its newspapers in smaller cities goes along with its overall strategy: Aim the product at the most specific market possible. "Our daily newspaper strategy is to be in small markets that are growing," Mr. Marbut says. "In fact, if we have a daily in an area, we like to be the only daily in those markets."
Mr. Marbut especially likes to buy a weekly paper and gradually expand publication until it comes out on a daily basis.
While he watches his newspapers grow, he is also trying to break down the ingredients in the American melting pot, to "get the best use out of the advertiser's dollar," he says.
To accomplish this, Harte-Hanks uses advertising fliers, coupon offers, product samples, and surveys to identify and reach consumers for clients. One part of this effort involves a little magazinelike booklet called "pennysaver" -- hung on doorknobs in a plastic bag -- which contains store ads mixed with individual classifieds, except they are not classified. The ads are the same -- bicycles for sale, typing work done, dogs lost, and rings found -- but they are not put into categories, or "classified."
"That way, people have to read the whole thing," Mr. Marbut says. Furthering the segmented market concept, the pennysavers break a city down into neighborhoods of no more than 10,000 to 12,000 in "very tight zones," he adds.
In all, HArte-hanks has more than 11 million homes on its distribution lists, with neighborhoods broken down into categories that include income, residents' ages, and buying habits, found by checking stores in the area.
This targeted marketing "is the leading edge of the whole communications industry. This will eventually impact on how newspapers are run," he believes.
While even newspapers will change because of this, Mr. Marbut does not feel we are close to an all-electronic "news" paper," which comes into thehome on the screen of a computer terminal. But he does feel people could use these screens for specific information -- such as sports scores, weather, movie and television listings, stock quotations, airline or train schedules, and even some classifieds. A person looking for an old headboard for his new bed, for instance, could type in a request for a list of bedroom furniture ads.
The company is already conducting a test of this idea in Framingham, Mass. using that area's large number of home computer terminal owners, Harte-Hanks is electronically "deliverinf" the Middlesex Evening News, one of the papers it owns. With the system, customers can look at an overall directory of the "newspaper's offerings and call up subjects that interest them.
The $250,000 experiment, a joint venture with H. & R. Block's CompuServ division, will bring customers self-teaching programs, bill-paying services, and shopping by computer.
While Mr. Marbut holds out a lot of hope for the CompuServ experiment, if it fails, he already knows one reason why: "compuServ is going to home computer owner, who is a special breed of cat," he says. "Many of them are hobbyist who like to fiddle with this sort of thing. We'll have to do a lot of these tests."