Just eight years after Si Newhouse spent tens of millions to move Condé Nast into 4 Times Square, he was ready to move out.
In the first week of October 2007, Mr. Newhouse signed a deal with the real estate developer Douglas Durst to build a new tower for his company over a platform on the West Side rail yards at the southeast corner of 33rd Street and 11th Avenue. The building would be 1.5 million square feet, more than double the 700,000 square feet occupied by the magazine conglomerate at 4 Times Square, a building it shares with the law firm Skadden. It would be a symbol of the company’s dominance in the publishing industry, set apart from midtown, looking down on the competition—big enough to accommodate growth, expansion and more magazines, too.
“We’ve run out of space, and this would be an enormous step forward,” said Mr. Newhouse, in a tired warble, appearing in a promotional video made by Douglas Durst’s team. “We hope to be part of the development of the Hudson Yards project with Durst for the next 100 years,” Mr. Newhouse continued.
But, only weeks after the agreement was signed, the Condé Nast engine buckled. House & Garden, the shelter magazine that Mr. Newhouse had brought back to life in 1996, was abruptly closed. Mere months later, his real estate deal was dead: Mr. Durst hadn’t bid high enough to build a project on the far West Side of Manhattan.
Just a year after he’d contemplated a move, Mr. Newhouse was confronting a dramatically different economic landscape than when he’d been talking to Mr. Durst. The Dow had plummeted. The banks had failed. And even Condé Nast was contracting. Cuts, modest at first, were made: 5 percent of all budgets in October 2008. A few months laster, in March 2009, another 10 percent cut was ordered. The significant closures of Portfolio and Domino followed.
The prospect of the company growing enough to fill 1.5 million square feet of space, even years from now, seemed unfathomable.
And then finally, inevitably, there was the sudden announcement this summer that McKinsey was coming in to help CEO Chuck Townsend “rethink” the business that Si Newhouse had built for five decades. At the end of the firm’s tour of duty, four more magazines had been axed, including the elite, glossy ur–Condé Nast product Gourmet, and the seemingly promising start-up, Cookie. Over the past week, the “trickle” of layoffs that Mr. Townsend told us to anticipate two weeks ago have been made. By the end of next week, there will have been about 400 layoffs total in October.
One wonders whether the fabulous, powerhouse publisher that Si Newhouse envisioned inhabiting that massive tower on the West Side will remain fundamentally intact. Condé Nast executives say it will, but can it?
WHEN SI NEWHOUSE, who is now 81 years old, went to Condé Nast in the early 1960s, the company was just a small part of the Advance Publications business, which his father had built. The newspaper side of the company was thought to be the more desirable one (Newhouse pere installed his son Donald at the head of it). But Si persevered to build Condé Nast into the force that it became, and in the process changed the magazine world forever.
When the Newhouse’s bought it, the total circulation of Condé Nast magazines was 415,000 and the company was losing money. But, as these stories go, Mr. Newhouse made the most of his opportunity. Under the tutelage of one-time Vogue art director and eventual Condé Nast editorial director Alex Liberman, Si Newhouse learned what to love about magazines—what they looked like, how they felt, how they smelled. He was smitten. Over time, he made readers smitten, too. He also discovered how he could work in business. Instead of hitting cocktail and dinner parties, he poured over spreadsheets and market reports. When something wasn’t working, he called attention to it, and fixed it.