The Sunset of Si: As the Conde Nast Chairman Fades Away, His Glossy Kingdom is Losing Some Sparkle

Is There a New Newhouse in the House?

In the two years since Mr. Sauerberg took over, he’s significantly reconfigured the top of the company to look less like a magazine publisher, and more like a sales and marketing organization, inventing at least three new positions and eliminating dozens more. First, parent company Advance Publications hired a Yahoo! mergers-and-acquisitions executive, Andrew Siegel, to serve as “senior VP, strategy and corporate development,” i.e., “Find us the next Pinterest, please.” Next, it invested heavily in a brand-new entertainment division to translate so-called “premium magazine content” into television and movies. Almost a decade after Vogue sniffed at Bravo when asked to participate in Project Runway (Elle and Marie Claire happily took part, garnering immeasurable publicity for their efforts), Mr. Sauerberg tapped Dawn Ostroff, the woman behind America’s Next Top Model, to run the new division. In the spring, Condé Nast poached a Lancôme executive, Gillian Gorman Round, to be the first-ever VP of brand development, meaning “e-commerce, membership programs, video, product and sampling.”

The new management structure crowds out the once-crucial editorial director. Liberman hand-picked his replacement: James Truman, the natty, British-born editor who successfully reinvented Details as a proto-lad-mag for marketing-averse Gen Xers. Projecting an aura of millennial cool, he carried the torch for editorial ambition—and its handmaiden, expenditure—up to the brink of the print downturn (and he oversaw the design of that cafeteria). But after Mr. Newhouse used his “no” on Mr. Truman’s proposed art magazine, he left. The position still exists, but it is held by Tom Wallace, a veteran newspaperman and the former editor-in-chief of Condé Nast Traveler. Unlike his predecessors, Mr. Wallace is said to have a mind for budget-conscious as opposed to “visionary” editorial content. Meanwhile, as Condé Nast searches for new revenue streams, it seems to be performing triage internally, siccing Bill Wackermann, an old-school charismatic publisher, on Condé Nast cash cow Glamour, for example.

Critics note that Mr. Sauerberg’s slew of new divisions have yet to yield anything lucrative, and the new team’s mandates are only growing more urgent as Condé Nast’s core businesses fade. Earlier this month, CMO Lou Cona laid off much of the company’s print corporate sales team, including the leader of its brand management service, Ideactive. September issues came in light this year, with the exception of Vogue, and publishers were asked to trim their budgets by 10 percent, according to WWD. Like any Condé Nast insider to climb to the top of the heap, Mr. Sauerberg has quickly become the subject of ouster rumors, but it’s early yet. More important, it’s hard to discern who will be judging his efficacy. The changing business model of Condé Nast combined with dramatic shifts at other arms of Advance Publications have renewed a decades-old media parlor game: speculating about Mr. Newhouse’s succession.

According to Thomas Maier’s Newhouse, a long-standing tax loophole (the subject of a failed $1 billion IRS lawsuit in the 1980s) will expire with the passing of Sam Newhouse’s sons, leaving the third Newhouse generation with an unprecedented tax burden, which it will have to “rally to overcome.” Mr. Newhouse has said that his first cousin Jonathan, who runs Condé Nast’s lucrative international business, will replace him, but Jonathan is said to be happily stationed in Europe. At Advance Publication newspapers in Michigan, Louisiana and New Jersey, Steven Newhouse (Si’s nephew, long identified as the third-gen Newhouse to watch) has proven himself a savvy businessman who little relishes underwriting a failing business model. He has reduced the frequency of the family’s print newspapers, focusing their pared-down staffs on digital platforms instead. Steven’s wife, Gina Sanders, is the CEO of Condé sister Fairchild and well-liked by top Condé Nast editors, making her a favorite internal candidate to replace Si.

While the next generation seems equipped to face Condé Nast’s new economic realities, however, it may no longer have the motive. As Condé Nast diversifies its business, distancing itself from the glamorous magazine company that became an improbable home for the family’s misfit patriarch, a once-unthinkable sale may be far less painful.

“Elegance is refusal,” Diana Vreeland pronounced, back when she was in Si’s good graces. Then again, acquiescence does have its advantages.