Media Money with Julia Boorstin

Conde Nast Takes an Ax to Its Magazines


When news got out that Conde Nast was cutting 25 percent from many of its magazines' budgets, industry insiders speculated some magazines would cut back on the number of annual issues and that it would shutter one of its two food magazines. So today's news comes as a surprise: the publisher is shuttering Gourmet magazine, as well as Cookie, Modern Bride and Elegant Bride Magazine. This comes on the recommendation McKinsey consultants, who swept into Conde's fancy Times Square headquarters for three months to look for a new model for the new ad market.

No surprise that Conde Nast has suffered from the precipitous drop in ad pages as luxury retailers and automakers, among others, pulled back their marketing spend. (In the second quarter more than half of Conde Nast's print publications endured a drop in ad pages of more than the industry's 29.5 percent average). The surprise is the fact that the privately held publisher is shutting down so many titles and all at once. And it's never before taken the axe to as historic and distinguished a title as Gourmet. Even long-time Conde Nast employees guessed that the younger Bon Appetit would be more likely to get a pink slip than Gourmet, which was founded in 1940 and run by vaunted food writer Ruth Reichl.

This digression from Conde Nast's typical approach seems clearly the hand of consultants. The company doesn't have the pressure of shareholders forcing it to put its most famous titles to rest. Consultants don't have the emotional attachment to the history, and probably see no reason to stick to Conde's pattern of only closing newer titles. They're focused far more on the bottom line and number crunching advertising declines. One has to wonder if the consultants’ decision to bury a nearly 70 year-old title overlooks the brand's resonance or if this ruthless approach is exactly what the magazine business needs to survive.

Perhaps its no coincidence that today the Financial Times reports that Time Warner's magazine division, Time Inc, is in talks with Conde Nast and Hearst to start a content aggregation system for magazine content. The idea would be that like Hulu, which is co-owned by Disney, NBC Universal, and News Corp , publishers would own an equity stake in the stand-alone website. the FT writes "publishers fear repeating the mistakes of the music industry," but I think it's already far beyond that. Print advertising pages are down, and may never return to their pre-recession levels. And consumers already get so much content online for free, that subscription revenues are seriously at risk.

Cuts like Conde Nast's are bound to continue throughout the newspaper and magazine business, and now all eyes will be on how publishers learn to use devices like the much-talked about tablet, to start charging for their content again. While Apple's iTunes store managed to wrest control of digital music sales from the hands of the music industry, publishers are hoping Apple could be a partner, as it readies its upcoming tablet computer, which could be a perfect digital device for magazines.

Questions?  Comments?