FOR years, Condé Nast seemed to
ride above the fray in the consumer magazine world. But in 2009, that is no
longer the case.
The publisher is reeling more
than its rivals, as luxury-goods retailers hoard their ad dollars. While the
industry is down 24 percent in ad pages so far in the first quarter, many of
Condé's venerable titles are down 30 percent. Start-up mag Portfolio is down a
staggering 60 percent, while Wired is off 57 percent.
"They are having the worst
year of any publisher," said one rival executive who once worked at Condé
Nast and said the company's recent cuts of 5 percent each on expenses and
staffing isn't enough.
"They are overstaffed and
overpaid. They should have cut back 20 percent when they cut back five,"
this person said.
That kind of thinking is stirring
fears inside that a new round of cuts could be coming. And for the first time
in more than a decade, the privately run company led by Chairman S.I. Newhouse
Jr. and CEO Charles Townsend could be awash in red ink.
"We continue to manage our
business through a difficult economic climate," said a Condé spokeswoman.
Much of the problem rests with
Condé's policy of never discounting off the rate card.
"Advertisers are finding that they can buy around them," said the former executive.
Only one magazine in its stable
is showing a rise over a year ago: Golf World, a small circulation weekly, that
is up 16.5 percent through the Feb. 23 issue.
Meanwhile, David Carey, a group
president at Condé Nast, has been quietly expanding his "group,"
adding responsibility for Condé Nast Traveler and The New Yorker.
While Carey's expanded role is
seen as a way to try to impart some of his insight and expertise, it also
broadens him beyond the magazines in his group that are struggling. He already
had Wired, Portfolio and the golfing titles.
Richard Beckman, arguably the
company's top revenue generator, has pulled his name out of the running to
become the new CEO of Parade Publications. He'll remain the president of the
Condé Nast Media Group, which generates about 80 percent of the company's
revenue through the group advertising buys.
In other developments, Wired,
which last week lost Chris Mitchell as publisher to the vacant publisher's post
at Condé Nast Traveler, has promoted Associate Publisher Howard Mittman to
replace Mitchell.
Singleton Watching 'SF Chronicle'
Situation 'With Interest'
By Joe Strupp
William Dean Singleton, whose
company owns nearly every daily newspaper in the Bay Area outside of the San
Francisco Chronicle, remained mum on whether he would be interested in the
Chronicle following Hearst's announcement that it may sell or close the paper.
With MediaNews Group owning a
dozen San Francisco area papers -- including the San Jose Mercury News and the
Oakland Tribune -- speculation has already begun over what he may do as Hearst
reveals it needs to severely cut costs in order to stem some $50 million in
annual losses. Hearst said late Tuesday it would close or sell the paper if it
could not get deep concessions from unions and reduce other expenses.
"We'll just watch it play
out," Singleton, who is CEO and vice-chair of MediaNews Group, told
E&P Wednesday. "I am not going to speculate on what could happen. It
would be futile to speculate on the future."
But with his Bay Area News Group
papers successfully implementing many consolidation programs, from news
coverage to centralized business operations, Singleton's chain is poised to
takeover the Chronicle easily from an operational standpoint.
But, from a financial standpoint,
he may be in no better shape than many other newspaper companies, and perhaps
worse. MediaNews remains highly leveraged, with Hearst holding a substantial
amount of MediaNews debt.
Hearst also owns 31% of MediaNews
Group newspapers outside of the San Francisco Bay Area, Singleton said.
Still, the two companies have a
history of joint partnerships, most recently with four Connecticut papers that
MediaNews had managed for Hearst. That arrangement ended last year when Hearst
took control of the papers, and also purchased the Connecticut Post of
Bridgeport from MediaNews.
Even if MediaNews could not purchase the Chronicle, it could be part of any variety of deals to keep the paper going, through shared content, circulation or other opportunities.
"Hearst is a valued partner
of MediaNews," Singleton said. "We've worked together on many fronts.
But this is a situation that they are playing out on their own. We will be
watching with interest."
Singleton added that he is not surprised the Chronicle would be in such a difficult economic position. "These are extremely difficult times for all newspapers, especially metro newspapers and even more especially California newspapers," he said. "I share their pain."