SLOW RIDE: It’s been a rough decade at Condé Nast.
Bracing for what looks to be at least a second straight year of operating in the red after seeing ups and downs with ad-dependent revenue since 2009 — when one of the first rounds of budget cuts at Condé rolled out — the publisher’s chief executive officer Robert A. Sauerberg on Wednesday told staff, and on Thursday The Wall Street Journal, that there are plans to get the publisher profitable by 2020 and add $600 million in new revenue.
Chief among the strategies is to reduce Condé’s reliance on advertising as a revenue stream (little surprise, since 50 of the largest advertisers last year cut print ad spending by $417.5 million). As vital as that strategy is, though, given the market, it’s actually a goal that Condé has pursued for years, when post-Great Recession advertising pages plunged for its magazines and everyone else’s.
There were some subsequent peaks that made maintaining the status quo possible, but when Sauerberg in 2010 became Condé’s president, then-ceo Charles Townsend said he was being charged with “leading the company in the creation of a new business model,” as a shift by readers and advertisers from print to digital was becoming the norm. At the time, Townsend lamented the company’s struggle with other forms of monetization.
“Why will consumers pay 180 bucks a month for TV programming they never watch, don’t know the brands of, have no interest in, and will [only] pay a dollar a month for a magazine subscription to Glamour?” Townsend said at the time (a tacit admission of how deeply the publisher was discounting its magazine subscriptions).
Although cable companies are now facing their own foe with digital streaming, which basically used Townsend’s rhetorical question to its advantage, streaming services and cable companies are still making a lot more money than Condé.
When Sauerberg became ceo in 2015, he said he’d “never been more optimistic about our company and business” — but more declines came. However, there have been forward-looking investments, starting with Condé Nast Entertainment in 2011 (although its original leader, Dawn Ostroff, left in June for Spotify) and more recently the addition of OTT channels and the purchase of CitizenNet, a data science company, which is part of this year’s expected loss. These investment areas have been a point of hiring for the company. CNE, for example, started as a two-person operation but now has around 300 staff.
Although Sauerberg told the Journal that in order to be profitable again the goal is to bring advertising down to 50 percent of revenue from its 70 percent share through investments being made in “a data platform, an events business” and a scale-up of its digital business to make up the difference, these, too, are largely plans that have been under way for several years.
Something that has also been happening since the Great Recession, and is set to continue, according to Sauerberg, is deep cuts to staff, although employee losses already number in the low-to-mid hundreds, according to an estimate based on WWD reporting over the years. Even the previously untouchable Vogue has this year been forced to slim down and reduce its budget by putting high-profile and longtime staffers on contract instead of on salary, but it’s only the latest to have the hammer lowered. Creative, copy and research teams have been combined and shrunk across the company, while big-time and well-paid editors like Keija Minor of Brides, Graydon Carter of Vanity Fair and Cindi Leive of Glamour all resigned last year, and were succeeded by younger, and presumably much lower-paid, ones.
But with cuts on the magazine side have come hiring in other areas, including back-end operations. Overall, total Condé staff hovers around 3,000, roughly where it’s been for at least the last five years.
There’s also the shedding of some titles, now and over the last decade, as the company shrinks to focus on “core” titles and pivots to new business and revenue opportunities. Sauerberg confirmed reports in an e-mail to staff last week that Brides, Golf and W magazines were up for sale, but it seems there are few buyers out there right now. As first reported by WWD, sources have W editor in chief Stefano Tonchi looking to fund a purchase of that magazine, but there’s no clear interest yet in the others. Nevertheless, sources say the sale process should be wrapped up some time in the fall, giving Condé a much needed year-end cash injection if it comes to pass.
This again is a well-trodden strategy at Condé. Layoffs and doing away with some magazines, in one form or another, have been happening since 2009 when the company started slashing and burning in earnest under the advisory of McKinsey & Co. (which, ironically has been shed, too, as Condé is now working with Boston Consulting Group, which helped it prepare its new five-year plan). The sell-off strategy included in 2014 WWD’s parent Fairchild Fashion Group to Penske Media Corp. for an estimated $100 million, representing a loss of about $500 million, as Condé had paid about $600 million to acquire Fairchild from Walt Disney Co. in the Nineties. That decade seems to have been the last of the really good times for magazine publishers, especially Condé, an era when expenses flowed free and heel height didn’t matter because there was always a Town Car a call away.
Although the public parts of a strategy to get privately-held Condé back into chic black on its financial reports seem to have changed little over the last ten years, the previously lavish culture of the company and its overall structure and focus certainly have. The changes seem likely to continue.
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