TOWNSEND TALKS: On Thursday, Cindi Leive quizzed Condé Nast chief executive officer Charles Townsend at the Paley Center for Media in New York City. Townsend, a famously blunt executive, doesn’t sit for interviews often — his last was over a year ago, with The Wall Street Journal —but during the hour-long session with Leive, he gave the first at-length public exposition of the company’s outlook going into 2013. Condé brass — including chief operating officer John Bellando and chief administrative officer Jill Bright — were in the audience.

Townsend outlined some major developments at the company, including a rate-base increase for several brands; the reconfiguration of its subscription business, and details of the Condé Nast Entertainment division.

This story first appeared in the October 26, 2012 issue of WWD. Subscribe Today.

Publishing executives, including those at Time Inc. and Hearst, have taken every opportunity to stress that print is still the major slab of their business, Newsweek be damned, while digital revenue, though increasingly important, is at the moment just an appetizer.

Townsend was no different.

“Our print business, even in the worst moment, continues to grow and the margins are sharper and the gross profit margins are mouthwatering,” he said. “When this economy recovers, the print business is going to be on fire.”

Townsend sounded equally bullish at the beginning of 2012, predicting an “exceptionally sunny forecast for 2012,” he wrote in a company memo. Print revenue ended up being weaker than expected, and the company found itself asking brands to cut back budgets and lay off staff — as many as 60 — earlier this month. Condé is not alone — on Thursday, The New York Times reported limp revenue growth, and Hearst has quietly collapsed several departments of its shelter titles into one, resulting in layoffs. Time Inc. lost 2.3 percent of its traditional ad pages and Hearst half a percentage point in the first half of the year, according to data compiled by Media Industry Newsletter.

While revenue from digital advertising and circulation grows, it has not yet caught up to the “mouthwatering” riches of print. Indeed, Townsend noted that Condé’s Web business is tracking at about half the rate the company expected.

“We were looking for 30 percent [growth], and instead we’re looking at 15 percent,” he said. In short, digital revenues are “truly a fraction of our overall business.” He also said the anemic American economy was to blame for the soft end-of-year results.

But in the coming year, Townsend is optimistic because Condé is poised to grow what he called “alternative platforms,” such as tablets, bundled subscriptions and CNE.

Before diagnosing the industry’s major affliction — a-buck-a-month subscriptions — Townsend described a recent interaction with his phone repair guy.

The guy installed a whole new system and told Townsend he had saved him some $80 a month. “I almost fell out of my chair,” Townsend recalled incredulous. “I paid $80 a month for phone service? What do I get for that?” The industry had made a similar mistake with circulation, he said.

But as Condé adds more to its magazines — apps, events, licensed products — it can bundle all sorts of incentives into subscriptions and demand more from readers.

“Now we have a chance to play ball with consumers on the basis almost every facet of the entertainment industry has been able to deliver,” Townsend said.

On Thursday, Townsend said Condé would increase the traditional rate base for several brands in November, the New Yorker and Wired among them, though he didn’t offer details.

A spokeswoman said the company would divulge more later this fall. Wired said Tuesday it now promises advertisers 825,000 subscribers, a 3 percent increase.

A rate-base increase across several magazines is a bold move, one that hasn’t happened in some time. But Townsend attributed the development to the rise of digital subscriptions, which is now approaching 10 percent of overall circulation. The conclusion he draws is that a higher circulation will give the company more leverage with advertisers, as well as add to subscription revenue.

“This is not a collision, it’s a contribution,” he said. “It’s the way we’re going to grow our business.” Separately Thursday, Condé, as well as the Times, the Financial Times and Bonnier announced they’ll have apps on Windows 8.

As for CNE, Townsend opened the door on Dawn Ostroff’s office just a bit and gave her a vote of confidence.

“We’ve been in this business for six months,” he said — a year, someone from the crowd corrected him. “We’re just getting it going, but, boy, does it look attractive.”

Townsend said CNE has 15 projects in development, though he didn’t offer specifics.

He noted it’s going to take a while for any of the projects to come to fruition, and for others to take shape. For instance, there are still questions about who owns stories, Condé or a magazine contributor? Many contracts are expected to come up for review by the end of the year. Townsend said Condé is still working through the intricacies of those questions and clarified it’s trying to propose a partnership, not outright ownership. That means “more income for contributors but also ourselves,” he said.

Results are likely to come first from digital video, which Condé produces plenty of already but, as far as Townsend’s concerned, doesn’t monetize enough. That effort, led by CNE chief digital officer Fred Santarpia, is working on setting up distribution and programming advertisers can sink their teeth into, Townsend said.

And the expectations are high for revenue just from digital video: $10 to $15 million in the first year, Townsend said.

“That’s from zero and it’s not a lot,” he said. But, Townsend said, “It’s $10 or $15 million more than I had in 2012 in the video business. Where can that go? I think it goes through the moon.”

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