Facing Losses, Condé Nast Plans to Put 3 Magazines Up for Sale
Anna Wintour is staying, but the once-flush company behind Vogue and The New Yorker lost roughly $120 million last year.
Aug. 1, 2018
Condé Nast, the company behind Vogue, Vanity Fair and The New Yorker, became one of the most successful magazine publishers by charming readers and advertisers alike with a formula built on old-world glamour and all-American pizazz. But now, even after having taken measures to cut spending and make itself more digitally savvy, the company is expected to adopt a more radical strategy to ensure that it does not fade away.
Robert A. Sauerberg Jr., the chief executive of Condé Nast, plans to address senior staff members on Aug. 8. The meeting will come in the wake of an extended visit from Boston Consulting Group, which recently concluded a monthslong examination.
It does not promise to be a cheerful gathering. According to more than a dozen current and former Condé Nast executives, who spoke on the condition of anonymity in order to discuss internal matters, the measures instituted at the company over the last decade — closing Details and the print versions of Self and Teen Vogue; laying off some 80 employees last year; combining the photo and research departments of different magazines — have not been enough to stem the bleeding.
The company lost more than $120 million last year and plans to put three of its 14 magazines — Brides, Golf Digest and W — up for sale, three executives said. The marquee titles, including Vogue, Vanity Fair and The New Yorker, are safe.
In a cost-saving measure, the company will also soon begin the process of leasing at least six of its 23 floors at 1 World Trade Center, the Lower Manhattan tower that has been its headquarters since 2015. The New Yorker and Vanity Fair will be among the magazines that will eventually be moved to make room for new tenants.
Condé Nast built its business — and mystique — by excelling in the now-antiquated art of making magazines. They were costly to produce but highly profitable, as a whole, and editors like
Diana Vreeland, Tina Brown, Anna Wintour and Graydon Carter became cultural arbiters who traveled in the same circles as the people they chronicled.
While the company’s troubles are not so severe as those hitting other media organizations in recent days — the Tronc-owned Daily News lost half its newsroom last month — they are unsettling to veterans at a company where top editors once had roomy offices designed to their own specifications, the everyday use of chauffeured cars and, for a favored few, no-interest loans to ease the purchases of Manhattan brownstones and even second homes.
But the decades-long magazine boom that made such trappings possible is a thing of the past. A change in media-consumption habits has elevated Instagram, Snapchat and YouTube above the printed page. Before Time Inc. was sold to the Meredith Corporation, it experienced sharp declines in annual revenue. The ad buying firm Magna
projects print magazine ad sales will fall by a double-digit rate this year.
Some longtime Condé Nast employees are wondering how much of the company’s decline can be attributed to the diminished state of print media and how much is the result of self-inflicted wounds.
Contributing to low morale at 1 World Trade was a sense that the company’s leadership was in flux, which resulted partly from a recent spate of articles and items speculating on the future of Ms. Wintour, the editor of Vogue since 1988 and the company’s artistic director. The gossip had it that she was looking to make an exit from Vogue after publishing her next September issue, with Beyoncé on the cover.
More than a top executive and editor, Ms. Wintour, with her trademark flapper’s bob and Chanel sunglasses, serves as a company avatar. Meryl Streep portrayed an exaggerated version of her in “The Devil Wears Prada,” and Ms. Wintour played herself in the recent “Ocean’s 8,” a movie largely centered on the
Met Gala, the yearly New York benefit that she stage-manages with the assistance of 175 Vogue employees.
Mr. Sauerberg tried to stifle the chatter on Tuesday, when he released a statement that Ms. Wintour “has agreed to work with me indefinitely in her role as editor in chief, Vogue, and artistic director of Condé Nast.”
It will take more than corporate stability, however, to reverse the company’s slide.
The $120 million loss in 2017 came about because of a sharp decline in ad revenue generated by the print magazines. Gains in the digital arena have helped offset the loss, but not enough to make the company profitable. Condé Nast reached its decision to entertain offers for Brides, Golf Digest and W partly on the recommendation of Boston Consulting Group, the three executives said.
Condé Nast declined to comment for this article.
John Wagner, who oversees ad spending with publishers at the media agency PHD, questioned the company’s strategy, saying that Condé Nast can be “quick to close things, versus trying to find a solution.” He added, “I’d like to see them continue to invest — keep the brands alive, even if you have to change their rate base or publishing frequency.”
Expense budgets, already less than what they were in the days of leisurely lunches, are getting tighter. One publication recently informed its contract writers that their fees had been cut, according to two people at the company.
The $120 million loss — for a publisher once accustomed to hundreds of millions in annual profits — has put pressure on Mr. Sauerberg, who joined Condé Nast as an executive vice president in 2005 and rose to the top position in 2016.
The Newhouse family remains at the helm. It entered the magazine business in 1959, when
Samuel I. Newhouse, a self-made newspaper magnate, bought Condé Nast for $5 million. His elder son, Samuel I. Newhouse Jr., known as Si, expanded the company after taking charge in 1975. During his roughly 40 years as chief executive, the self-effacing mogul, who died last October, revived a moribund publication, Vanity Fair, purchased GQ and The New Yorker, and installed Ms. Wintour as the editor of Vogue.
Condé Nast is a subsidiary of a Newhouse company, Advance Publications, which is controlled by Donald Newhouse, 89, and his son, Steven O. Newhouse, 61. Jonathan Newhouse, 65, a cousin of Si, is the chairman of Condé Nast International, home to British Vogue and dozens of other international editions. That arm is something of a corporate oasis, given that Europeans, unlike Americans, have yet to give up the magazine habit.
While many of the roughly 30 newspapers in the Newhouse chain have endured layoffs and other cost-saving measures, the Newhouses’ fortunes have not suffered, thanks to the family’s $10.4 billion sale of its cable businesses to Charter Communications in 2016. A provision in the deal gives Advance an additional annual payment of $150 million, cushioning the parent company from any recent losses.
Condé Nast has gone through fits and starts as it has sought to revise its corporate identity for the digital age. Dawn Ostroff, the head of Condé Nast Entertainment, left for Spotify last month with little warning. The company also lost another top lieutenant last month with the exit of Josh Stinchcomb, who oversaw 23 Stories, the company’s in-house advertising unit.
The business Ms. Ostroff oversaw, which got its start in 2011, is focused on the development of digital video, film and television projects. It is very much on the rise and will significantly narrow the company’s losses this year, two executives said. Mr. Sauerberg highlighted the division earlier this summer in a companywide email. “We crossed an important milestone,” he said. “Our web and video businesses have grown so significantly, their revenue surpassed print for the first time in the company’s history.”
I would love a retrospective to our most recent history (90s/early 00s). Well... They sure got my attention!
I wonder what that contract looks like! Is it like Karl at Chanel, for life? I mean damn, she might even break the record of Edna Woolman Chase who was EIC for 36 years, i think. She ain’t going nowhere!! Edward will have to wait.........
