After a summer of mad speculation at 4 Times Square, Condé Nast editors and publishers are beginning to finally learn what life is going to be like in a post-McKinsey world. In the last few days, Condé Nast executives armed with McKinsey-branded binders have started to deliver budget targets for 2010 to editors and publishers.
The execs told representatives from Details, Traveler and Glamour that they needed to cut their budgets next year by roughly 25 percent—“25-ish percent,” in the words of one source. Gourmet and Teen Vogue also had meetings, and it is believed they’ve been asked to make similar cuts. It is unclear if the rest of the company’s will be similarly instructed.
At the meetings, Condé Nast officials—which have included COO John Bellando and editorial director Tom Wallace—have handed over a packet produced by McKinsey, complete with pie graphs and charts, on ways to manage costs. The majority of editors and publishers are expected to meet further this week and everyone will be expected to submit their revised budgets over the next three weeks. McKinsey is currently in the second to last week of its three-month tour at Condé Nast.
At least one magazine, however, is exempt from these big cuts. Off the Record has learned that The New Yorker won’t receive any mandated budget cut from executives at the company. The magazine has been meticulously cutting from its budget throughout the past year, and its belt-tightening has been met with approval from Condé Nast chairman Si Newhouse and CEO Chuck Townsend. The magazine has long been Si Newhouse’s pet favorite and editor David Remnick was told personally by Mr. Newhouse back in July that he wouldn’t have to meet with McKinsey.
But as for other editors and publishers … if you’re getting a 25 percent budget cut, where do you begin?
That’s up to you!
“They’re not being specific,” said one source about the meetings. “You get to it however you get to it.”
In other words, there won’t be any meddling, line-by-line suggestions. If you want to chop heavy from your expenses, go for it. If you want to cut freelance, up to you. (As Mr. Townsend told us in an interview a few weeks ago, “I can boil what I say to editors and publishers down to the simplest statement in the world and that is: You, not me, you have a responsibility to run this business in a responsible way. It’s your responsibility. I want to see your proposal of how you’re going to do it.”)
But with at least a quarter of the budget getting slashed, layoffs are now seen as inevitable.
“There will be significant layoffs,” said one alarmist source at the company. “Significant.”
Another well-placed source explained that editors and publishers can address the layoff issue in one of two ways: “A lot of the junior people might be let go, but if I decide we need more Indians than chiefs, I can cut two senior people and fulfill a giant chunk of the cut.”
As jittery as the building is going to be over looming layoffs, there is some relief in that it appears there are no imminent title closures.
“The McKinsey people are number crunchers,” said one source. “They’re going to tell you to get to a certain number. I keep hearing nothing is going to close.”
The most likely scenario for some magazines over the next few weeks will be reducing frequency.
According to someone familiar with McKinsey’s recommendations, the consultants were particularly interested in basic calculations in the ratio between edit pages and ad pages. A magazine like Gourmet, which in September had 40 ad pages versus 74 editorial pages, just barely squeaked above the minimum book requirement of 104 pages (compare that to Vogue, which had 427 ad pages versus 157 editorial pages in September). Gourmet is therefore a prime candidate for reducing frequency, a source said.
Meanwhile, it appears men’s mag Details, oft-thought to be beleaguered, has been thrown a lifeline. However, since there are only about 35 staffers on the editorial side there, a 25 percent cut could be quite damaging.
Yet another source pointed out that even though there are no immediate plans to close down any magazines, a decision doesn’t have to be made until the end of January, which is the end of the fiscal year. (The home-decor magazine Domino was shuttered on Jan. 28, 2009.)
When we asked Mr. Townsend last month if any magazines would close, he said, “My job, as opposed to the jobs of the people who run our businesses as editors and publishers, my job is the preservation of assets. So I’d like to have the full array of assets that we currently have on the table and be ready to go.”
It seems they will be slightly diminished assets.
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