The company could therefore stomach a small loss if it meant that it was setting itself up for the future. To that point, the Dallas Morning News has no debt and a cash balance of around $33 million, which becomes Hearst’s after the acquisition, bringing the net cost of the purchase closer to $40 million. 

These factors explain why Hearst is in the news business and why the Dallas Morning News felt comfortable selling to it, but why focus so much attention on Texas? 

The answer comes down to the opportunity Hearst sees in the state, as well as the efficiencies it unlocks by owning news outlets in its four biggest markets. 

Earlier this year, I reported that Hearst had begun experimenting with cross-promoting its news and magazine brands to its audiences based on their consumption behavior. If you had shown an interest in the lifestyle content section of the Chronicle, for instance, you might receive a targeted promotion to subscribe to Cosmopolitan.

As Hearst continues to operate its Texas outlets as spokes in a larger wheel, it can obviously find efficiencies in areas of shared resources, like accounting and print distribution, but it can also combine its audience data to optimize its recirculation, subscription, and paywall strategies. 

If operating local news were as simple as finding efficiencies of scale, though, the other major players in the ecosystem would not be struggling as much as they are. Hearst’s benefit is in the markets it’s chosen—each of these cities are major metropolitan areas with large, discrete subscriber bases. 

It has some precedent for this strategy. Hearst operates a string of news outlets in Connecticut and has been highly acquisitive in the region, snapping up more than a dozen publishers in the area since 2017. While smaller than Texas, Connecticut is an affluent market that has proven its ability to support and sustain local news.

Hearst’s publications might not provide a lot of cash, but the investment the company has funneled into them is a rounding error on its larger business. As long as the publishers can stay afloat, the news business can continue to serve as an homage to the broader Hearst legacy.

The only real threat to the longevity of this strategy could come from the trust Hearst set up to govern the company after his death, which is set to dissolve when all of the family members who were alive at the time of his 1951 passing have themselves died. While a bit of a morbid guessing game, Morrison estimates that will likely happen in the next 10 to 15 years.

At that time, the unique ownership structure that has allowed the company to operate in lockstep with the vision of its founder, rather than simply the maximization of shareholder value, could unravel. 

Beneficiaries of the trust—there are around 60, per Morrison—might then decide that the company’s ongoing patronage of the news business is not the best allocation of its resources. What the media business will look like by then is an entirely separate conversation, but the stage could be set for another messy succession struggle. 

Until then, though, Hearst might be the last profitable company still actively looking to get into the news business.