Facing losses, Condé Nast plans to put 3 magazines up for sale

Edmund Lee and Sapna Maheshwari

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.

Robert A. Sauerberg Jr., president and CEO, Condé Nast speaks onstage at the American Magazine Media Conference at Grand Hyatt New York on February 2, 2016 in New York City. 
Larry Busacca | Getty Images

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 $120 million last year and plans to put three of its remaining magazines up for sale, three executives said. In addition, the company will soon begin the process of leasing at least six of its 23 floors at 1 World Trade Center, the tower that has been its corporate home 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 declined to comment.

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The company built its business — and its mystique — because it excelled in the now-antiquated art of making magazines. The magazines 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.

But magazines have lost their former position, their dominance blunted by a change in media-consumption habits that 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 to 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 the print media business and how much is the result of self-inflicted wounds.

Contributing to low morale was the sense that the company's leadership was in flux, which resulted partly from a recent spate of articles and items speculating that Ms. Wintour, the editor of Vogue since 1988 and the company's artistic director, was looking to make an exit after persuading Beyoncé to appear on the cover of her next September issue.

More than a high-ranking 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.

Met Gala Chairperson Anna Wintour attends the Heavenly Bodies: Fashion & The Catholic Imagination Costume Institute Gala at The Metropolitan Museum of Art on May 7, 2018 in New York City. 
Taylor Hill | Getty Images

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 was the result of a sharp decline in the ad revenue generated by the print magazines. Gains in the digital arena have offset the loss, but not enough to make the company profitable.

Based in part on the recommendation of Boston Consulting Group, the three magazines that the company will try to sell are Brides, Golf Digest and W, the three executives said.

John Wagner, who oversees ad spending 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.

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 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., a self-effacing executive known as Si, expanded the company after taking charge in 1975. During his roughly 40 years in charge, Mr. Newhouse, who died last October, revived a moribund publication, Vanity Fair, purchased 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 Comunications in 2016. A provision of the sale gives Advance an additional annual payment of $150 million, considered the equivalent of a dividend, cushioning the parent company and its controlling family from the magazine publisher's recent losses.

Condé Nast has gone through fits and starts as it has sought to revise its corporate identity for the digital age. Until last month, Dawn Ostroff was the head of Condé Nast Entertainment, the unit devoted to digital video, as well as film and television projects that was started in 2011. She left the company for Spotify with little warning.

But the video business she oversaw 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."

The company is building its future around that business. That means Condé Nast is morphing from a company of glossy print magazines with high-priced ads into a producer of short-form videos with commercials. The videos range from how-to shorts affiliated with Glamour and Allure to more elaborate celebrity interviews produced for Vogue and W. The Vogue series, "73 Questions With," has generated more than 300 million views since it began in 2014.

Volume will be a key to returning to profitability. Each month the company produces an average of 417 videos that play on YouTube, Facebook, Snapchat and its own websites. Some series tackle subjects not often associated with Condé Nast. "Last Chance U," a documentary focused on college athletes from disadvantaged backgrounds, stands out from the other fare. Produced by Condé Nast, it appears on Netflix.

In addition to Ms. Ostroff, Mr. Sauerberg lost another top lieutenant last month with the exit of Josh Stinchcomb, who oversaw 23 Stories, the company's in-house advertising unit.

Condé Nast has also made bad bets in recent years. Last year it pulled the plug on its attempt at an online fashion retail site,, after nine months of development and an investment of more than $100 million. But recent investments may boost its online ad business. Advance spent $500 million in 2015 to acquire 1010data Inc., a startup that helps collect and analyze data for advertising and subscription purposes. Last year, Condé Nast bought CitizenNet, which has helped the company sell targeted ads.

The main obstacle, though, has been the loss in print readers and advertising dollars. Circulation continued to go down through May of this year, with Glamour, GQ, Allure, Architectural Digest and Golf Digest decreasing by 6 percent or more, according to MPA, the Association of Magazine Media. And as iPhone-entranced pedestrians drifted past newsstands, the company lost more than 20 percent of its ad pages last year, according to figures from research firm Kantar Media.

A sign of things to come was the hiring last year of Samantha Barry, who succeeded Cindi Leive, a Condé Nast veteran, as the editor of Glamour. Ms. Barry had no experience as a print editor, having run social media for CNN before taking over the magazine.

When her first issue landed in the spring, eyes within the company were fixed on the cover. In a starkly trimmed black-and-white scheme with a heavy border, it featured the actress Melissa McCarthy under the theme, "#the money issue," hashtag and all.

The verdict? A few editors were not impressed, according to several people familiar with the matter. It looked like a facsimile of a magazine, one of them said.

But that same cover elicited a different reaction from younger staff members, who are at a great remove from the company's mythos.

"Awesome!" a young editor said.