When evaluating companies, McKinsey tends to follow a predictable formula: efficiency experts study costs for three months, figure out how business units can boost performance and consider options for revamping management. Then they recommend savings.

At Conde, "savings" meant shuttering magazines, but a Journal spokesman insists this won't be a typical McKinsey house cleaning. "It is wrong to say we're engaging consultants to cut costs," Howard Hoffman told Forbes. "Our emphasis is on building and growing our products."

Normally, that kind of assurance would be dubious at best, but the Journal really is trying to figure out all sorts of things, namely how to launch a New York metro section, and what to do about all those people stealing their articles.

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.

>>READ THE BACK STORY ON THE END OF A CONDE NAST ERA

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.

By the early 1970s, Mr. Newhouse became known as a ruthless leader. The moment that circulation and advertising numbers slumped at Vogue, Si Newhouse threw the legendary editor Diana Vreeland right out onto the street. He brought Grace Mirabella in to take it over, but again, by 1988, when numbers were sagging, he dumped her in favor of Anna Wintour. (The move was announced to the world by Liz Smith on Live at Five on Channel 4—Ms. Mirabella didn’t even know she’d been sacked.)

Mr. Newhouse was able to revive Vanity Fair in 1983 because the numbers made sense. He could experiment with editors until he stumbled upon Tina Brown, who changed it entirely.

The magazines looked prettier, glossier, and expenses were let loose, up and through the roof. This was Si Newhouse’s Condé Nast: big budgets, big splashy pictures, the best writers and editors with total creative control who became wealthy celebrities in their own rights. Money poured, and magazines got bigger and bigger and better. No other publisher could compete.

“Si is arguably the most knowledgeable guy in the history of American magazine publishing and global magazine publishing,” said Tom Wallace, Condé Nast’s editorial director. “He is irrefutably the most successful.”

IN THE PAST, when goings did get tough, Si Newhouse could rely on his family’s fortune to keep Condé Nast exactly as he wanted it to be: awash in talent, elite. In 1985, The Columbia Journalism Review described the Newhouse family’s Advance Publications newspaper holdings, which were and continue to be presided over by Si’s brother Donald, as “cash cows in a pasture.” In 1987, in a story about the Newhouses, Fortune said, “It is almost impossible to wreck big monopoly newspapers. About all they will let you do is get richer and richer.”

But one leg of that table has gotten wobbly. The Newark Star-Ledger, the crown jewel of the Newhouse empire, lost $40 million last year. That paper, along with the others, has become a burden rather than a savior.

So can the Condé Nast of the future continue to look like the Condé Nast of the past? The company would say yes, although the confidence in that belief seems better suited to boom times than bust. The printed word will endure. Advertising will return. Profits can be what they were a few years ago.

Perhaps, thanks to the company’s radical scaling back, some of those things will come true. But that doesn’t mean that Condé Nast will return to being the Si-inspired institution that has been so revered. Just look at the past three months: Chuck Townsend has been the star of Condé Nast, the Si whisperer. Having a money guy steal the spotlight is a major shift for a company that has in the past been embodied and defined by superstar creative types like Liberman and James Truman, who was the Condé Nast creative director for most of the ’90s. (Ron Galotti and Steve Florio certainly had their share of attention, but they never owned the spotlight quite the same way.) But these days, the man of the hour—the man closest to Si—is in the executive suite on the 11th floor at 4 Times Square.

“I think when you get hit by the typhoon that Condé Nast got hit by, the first thing you have to do is rely on someone like a Chuck to do what Chuck does,” said one former Condé Nast executive.

When Mr. Townsend hired McKinsey, he didn’t ask for a model on how to figure out the future. He asked how to make 2010 a better year. McKinsey delivered an analysis of the company’s spending, the ratio between edit and ad pages, how it all compares to the wider industry. 

“It was purely a financial decision,” said an insider, about McKinsey’s visit. “It was about efficiency, how your salespeople perform, how your editorial costs run in comparison to other averages. There was nothing strategic about it. It was an analysis of numbers, expenses and revenue—not even how to handle it. There were no specific recommendations.”

Indeed, executives unapologetically said that McKinsey’s analytics were in service of a short-term fix, not a reformed goal.

“The purpose of this is to shape the company to prosper in what we expect will be 2010 revenues,” said Tom Wallace, the editorial director at Condé Nast. “If 2010 repeats ’09, which is a bad year, we’re fine. Even if there’s a double dip. We’re prepared for it. If there’s any improvement at all, we’ll be in extremely good shape.”

But is that enough at this point? What about the grand launches that we’ve associated with Si Newhouse’s Condé Nast? And what about online efforts, which everyone seems to agree are integral to the future of media? (The company announced on Tuesday that GQ will be available for $2.99 on your iPhone starting next month. But even Mr. Wallace conceded to us that a smartphone “is not ideal” for magazine pieces. It’s a start, but nothing like a solution.) Doesn’t Mr. Newhouse need a new whisperer, à la Lieberman or Truman, to take his company into the post-McKinsey era?

“It’s not visionary stuff,” said the former Condé Nast executive of the current state of the company. “It’s about cutting and pulling back and restoring some of the fundamentals. That’s what every company has to do—otherwise they go out of business. One hopes that after that, a new vision can assert itself that is not just about how Chuck thinks. At some point, the company will need a new visionary.”

“THERE IS NO particular global view about what Condé Nast should be,’’ said Mr. Newhouse in an interview in 1989 with The New York Times Magazine. Instead, he said, “thinking pragmatically” is the key to his company. When it comes to starting, buying or revamping a magazine, Mr. Newhouse said then that he does it “if it seems like a good idea at the time.’’

Twenty years and one big giant media retrenchment later, there’s no evidence that Condé Nast has a new strategy. But it remains to be seen how, in this climate, Condé Nast can live at the same altitude it has inhabited for the past 50 years.

“How would you know what’s going to happen in the magazine business?” said Mr. Wallace. “You would look at its vital statistics. You would look at its sources of income from consumers, and from advertisers. And you would look at where you’re finding your circulation. We have no problem with circulation for print magazines.

“We have what we believe is a short-term problem with advertising revenue,” he continued. “That problem seems to be improving. How long will there be print magazines? I don’t know. But for as long as there will be, Condé Nast is well positioned.”

The core belief of Mr. Newhouse’s company—that advertising will return, that everything will be O.K.—is decidedly a risk. One has to wonder if Mr. Newhouse is simply comfortable to look into the next frontier, if this confidence in the old model is born as much from familiarity as from true belief.

“We’re so attached to a great publishing model that served us so well from World War II to September 15, 2008, but what if they don’t know that the model has died?” said Samir Husni, the director of the Magazine Innovation Center at the University of Mississippi. “How many electrical shocks can you send before they see it’s dead?”

But Mr. Wallace fundamentally disagrees.

“The advertising revenue until proven otherwise is cyclical,” said Mr. Wallace. “And if it is proven otherwise, we’ve already adjusted for it.”

The 16 million people—and if you add in The New Yorker, the 20 million people—who read Condé Nast magazines every month, will stay right there, he believes. Along with the advertisers.

“I was the editor of Condé Nast Traveler during the Persian Gulf War. If you may remember, that was the end of travel as we know it. It was shutdown worldwide. It was followed by avian flu, SARS, hurricanes and typhoons and God knows what. There were bankruptcies on a massive scale in the hotel business.

“Travel came back,” he continued. “And Traveler came back. And then we went to September 11, Persian Gulf II. Stuff happens. And every time that happens, there is someone who wants to say it’s the end of the world.”

Si Newhouse, despite everything, still isn’t one of them.

For the famous pragmatic thinker who built the Condé Nast empire, it’s his greatest risk yet.

jkoblin@observer.com

More on Conde Nast:

There's More to Come at Conde Nast, but How Much?

The Gilded Age of Conde Nast Is Over

Ruthie in Wonderland! Ruth Reichl Reflects on Her Time at Conde Nast

“This was the big news,” said Mr. Townsend. “I don’t think it will be substantially more. It’ll be a trickle.”

But what is meant by “trickle” isn’t totally clear. Editors and publishers are still fidgeting with layoff numbers at their respective books—one day they expect to lay off five editorial staffers, the next day it could be 10—and those cuts are expected to begin next week.

Sources at different magazines within Condé Nast cautioned that the scale is still sliding—the total number of layoffs from each surviving magazine could reach somewhere close to 180, or it could wind up being far less.

>>READ THE BACK STORY ON THE END OF A CONDE NAST ERA

(Things don’t seem to be much clearer in the executive suite at Condé Nast, either. Mr. Townsend said in an interview that yesterday’s job cuts would represent 80 percent of the company’s total layoff figure. But a spokeswoman later backed off that remark and said, “the majority of the layoffs would be taking place this week.”).

Either way, the McKinsey-inspired changes finally began at Condé Nast this week with a sobering start: four magazines eliminated, including the big surprise that Gourmet was getting the ax over Bon Appetit. 

The Gourmet versus Bon Appetit parlor game began inside 4 Times Square 10 months ago. In January, the word “redundancy” became popular among executives and publishers, who began to frame a battle of two struggling food titles fighting for diminishing ads.

But the bake-off seemed to have a clear winner: Gourmet, by a mile.

“As companies across all industries streamline redundancies, you’ve got Bon Ap and Gourmet, and which has the stronger name? Gourmet, clearly,” a Condé Nast publisher told The Observer in the beginning of the year. “As a brand you want Gourmet. It’s got Ruth Reichl, it’s edited in New York. Bon Ap is in L.A.—it’s never really reflected the Condé Nast culture.”

For a company that favors sentimentality so much—The New Yorker was exempt from meeting with McKinsey and from mandated budget cuts because Si Newhouse treasures it, not because of superior business practices—the choice seemed obvious.

And then, suddenly, Mr. Newhouse decided otherwise. Mr. Townsend said he went to Mr. Newhouse at the end of last week with four magazines to cut, and Mr. Newhouse gave him a green light.

Instead of sentimentality, Mr. Newhouse seemed to favor some cold, hard Darwinism.

Mr. Townsend candidly said something that none of us ever knew: Gourmet was a bad business, and Bon Appetit was a better one. The luxury ad market Gourmet tied itself to had dried up, and Bon Appetit, which charged smaller rates and had a bigger circulation, was still pulling in money. 

In many ways, the writing was on the wall for Gourmet, particularly after McKinsey started nosing around in Condé’s spreadsheets. As The Observer reported a few weeks ago, McKinsey consultants were particularly interested in the breakdown between ad and edit pages. Gourmet’s ratio was miserable. Ruth Reichl’s title had only 40 ad pages against 74 editorial pages in September, the issue that is supposed to bring home big numbers (compare that to Vogue, which fell tremendously this past September, yet still had 427 ad pages versus 157 editorial pages in September). As McKinsey prepared recommendation packets for each book, and as COO John Bellando and editorial director Tom Wallace gave their editors and publishers pep talks, the ad/edit ratio kept popping up in conversations.

Cookie’s crumble was surprising, too, if to a lesser extent—it was one of the few magazines that saw an increase in ad pages last year at Condé Nast.

“I don’t think anyone can be shocked by any closing, but I think we were feeling pretty optimistic just because we had a lot of growth and we were looking at a lot of momentum in the upcoming year,” said Pilar Guzmán, the young and popular editor of Cookie, as she was packing up her office. “I started hearing a couple things very recently but rumors come and go and there are a number of magazines that have been whispered about for a decade and then it never comes to pass.”

Ms. Guzmán said she was in the midst of trimming her budget—by 20 percent—when Mr. Wallace emailed her Monday morning and asked for a meeting.

“It was quick and straightforward and it didn’t require that much explanation. The reasons are obvious,” she said.

The eliminations of Modern Bride and Elegant Bride were unsurprising. The two magazines shared staffs, and all the bridal magazines—including the surviving Brides—trade in far lower-end advertising than most Condé Nast titles. In other words: They weren’t particularly Condé-Nasty.

As for what’s next, each book has yet to declare its final budget and layoff numbers. Also still to be determined is how many titles will reduce their frequency (Mr. Townsend said it would be two to four). But as these long-awaited decisions finally come to fruition, Mr. Townsend said, quite proudly, his company is beginning to look a little more like Hearst and Time Inc.

“I think we’re coming down in our perk-distribution and looking more like others,” said Mr. Townsend. “I’m not saying that our editors can’t fly first class; I’m saying you choose how to spend your money. If the most efficient way to do business is to take a Town Car, then for Christ sake, I’m not going to insist people take subways and destroy their approach to business. I’m just asking people to be sensible.”

jkoblin@observer.com

More on Conde Nast from John Koblin:

Roughly 180 Laid Off at Conde Nast; Pilar Guzman Is Out

Details Publisher Gets Fired

The Gilded Age of Conde Nast Is Over

As Mr. Townsend noted, Gourmet’s recipes will continue to be filtered into Condé Nast Digital’s food destination site Epicurious.com. Its popular Gourmet “Test Kitchen” videos—in which food editors and stylists demonstrate cooking techniques, from concocting duck confit to cracking a coconut—will remain posted on YouTube and Epicurious.com.

Both Modern Bride’s and Elegant Bride’s verticals on Brides.com would be folded into the main site.

As for Cookie, its five daily blogs and online discussion forums (which are virtual ghost towns compared to sites like UrbanBaby.com) will go kaput. CookieMag.com will shut down soon. Condé Nast currently has no plans to create another online home for hip moms, according to Condé Nast Digital sources.

As for a possible online rebirth of Gourmet and other Condé Nast casualties? Many sources told The Observer they simply don’t know yet. And some weren’t sure if they could stomach a zombified version of Gourmet on the Web (see: Portfolio.com run by Condé Nast sister publisher American City Business Journals).

Gourmet’s Web editor, Christy Harrison, who joined the magazine’s site in 2007, seemed to be reeling from the news when The Observer reached her on Monday afternoon. She said she couldn’t comment on what would happen to her position, or on any of Gourmet’s digital properties. “We’re all still trying to figure out what’s going on,” she said.

A press representative told The Observer that no one at Gourmet would have information on the Web side of things, aside from the news about the Epicurious.com recipe transfer. “All we know is that we [the editorial and business staff] have to be out of here by the end of the day,” she said. Editors at Condé Nast Digital and Epicurious.com said they had few other details, or declined to comment.

Despite the fact that many users are familiar with Gourmet’s online presence mostly through Epicurious.com, Gourmet.com actually served as the magazine’s online home—a place marker for the magazine that featured a few print stories, along with a recipe search and some Web-exclusive features. Gourmet.com also had podcasts and a recently launched social networking experiment, Gourmet Guestlist, which worked as an online party planner, with theme ideas, recipes and email invites.

There was also Gourmet’s Cookbook Club. Editor in chief Ruth Reichl and other editors would comb through hundreds of cookbooks to test recipes and select favorites, and then invite users to try them in their own kitchens and comment at Gourmet.com. They partnered with ecookbooks.com to offer discounts on books stamped with the Reichl seal of approval.

One source from Condé Nast Digital told The Observer that these Web projects may be folded into BonAppetit.com, the site of Condé Nast’s other magazine about food and cooking, but those plans could not be confirmed.

Certainly, Condé Nast Digital has been working to beef up tech features on Epicurious.com, which is mostly known as a recipe source, with Bon Appetit, Cookie and Gourmet already contributing to the site’s 25,000 online recipes, along with Self and Parade. Users can add their own recipes, too.

In July, Epicurious.com announced a partnership with Snooth.com, a popular Web hub for wine aficionados, to provide vino recommendations alongside recipes. There’s also a free iPhone app, “Epicurious’ Recipes & Shopping List: On the Go and in the Kitchen,” which allows users to browse more than 25,000 editor-tested recipes (you can spot it featured in Apple’s “There’s an app for that” commercials.”). It has been downloaded more than 600,000 times.

Jane Goldman, editor in chief of Chow.com, an Epicurious competitor and the home of Chowhound forums, said magazines and food sites like Epicurious.com will have to get more social to grab foodie cliques.

“Food is like the original social application—come on over for dinner and we’ll talk,” Ms. Goldman told The Observer in an interview. “And yet, I think the food sites have not been innovative enough in figuring out ways for foodies to talk to each other or share things with each other.”

Epicurious.com already has community forums, membership profiles and recipe-swapping features—and is catering to amateur cooks’ desire for on-demand recipes with instructional videos. What does the modern foodie need? “Show it to me, don’t give me an article,” Ms. Goldman said. 

But she’ll miss Gourmet, she said. “When you are reading Gourmet magazine, you felt like you were in a particular world,” Ms. Goldman said. “Everything from the color palette to the typeface that they used to the photos to the writer that they assigned—you were in their world. On the Web, it’s a little more difficult to do that.”

It’s also difficult to get publishers’ attention on the Web—until now.

David Liu, co-founder and chief executive of top bride site TheKnot.com, noted that Brides.com’s development has come in “fits and starts,” with several relaunches and redesigns since its 2006 debut. “There’s so much money that comes into their traditional vehicle that it cannibalizes funds for the sites,” he said. “With the economy and the growth in online demands, it’s kind of forcing everyone’s hand,” to invest online.

Brides.com currently generates more than 45.5 million monthly page views from about 1.5 million unique visitors per month (TheKnot.com’s network of sites has 6.6 million monthly uniques). Brides.com, with photo galleries, wedding-planning tools and online video of runway shows, has recently launched a new partnership with MyRegistry.com to allow couples to add items from any store in the world onto a single online wedding gift registry.

Mr. Liu said the challenge for his own company, for Brides.com and for just about every other site on the Web will be personalizing users’ experiences and attracting loyal advertisers. “This is a really tough category to build lasting brand relationships with because a bride is only interested for, what? Six to twelve months?” he said. “They go away overnight.”

So do magazines, these days.

greagan@observer.com

McKinsey was preparing a plan for the financial giant that was titled, rather cryptically, "Project Destiny," but the company's C.E.O., Robert Benmosche, decided that the company has too many advisers already.

"I am busy getting lists of bankers, lists of lawyers, how many consultants we have," he grumbled in a document obtained by Bloomberg News. Mr. Benmosche plans to come up with his own vision, which sounds about like Fran Lebowitz when we asked her about McKinsey a few weeks ago: "If I needed advice I'd ask myself!"

It depends on who your boss is.

“The general consensus is, ‘Let’s get it over with,’” said an editorial-side staffer who will have to draw up pink slips at one magazine.

According to this source, that would mean executing layoffs immediately after the 2010 budget is finalized in the next few weeks.

But another insider said there’s no reason to do it right away.

“Everyone is different,” said this source, a business-side staffer at another magazine. “It’s all completely different. Some will do it in six weeks. Some will do it in two months.”

Technically, any editor and publisher can wait until the end of the fiscal year—the end of January—to break the news to staffers getting cut. The 25-ish percent reduced budget doesn’t kick in until Feb. 1.

This means layoffs could start in October at 4 Times Square and stretch out for several weeks.

Depending on your interpretation of things, this is what makes Condé Nast such a glorious place to work, or so frustratingly unruly. CEO Chuck Townsend and other executives at the company celebrate the entrepreneurial spirit of the place—each magazine organizes its own budget and is given a lot of freedom to run its own business. Yet, by giving each magazine so much autonomy, layoffs could take weeks as they’re doled out book by book. Compare this to, say, Time Inc., which announced on one day in October 2008 that there would be 600 layoffs at the company. It was a standard rip–the–band-aid–off approach to corporate communications.

It appears, at least for the moment, there isn’t any organized game plan at Condé Nast to adopt this strategy.

(A Condé Nast spokeswoman declined to comment.).

When we asked our editorial source, who plans to announce layoffs to staff immediately, if it was worthwhile to wait until December to cut staffers, the insider replied, “I don’t think there’s much appetite for that.”

When we asked our business-side source, who doesn’t plan to announce the layoffs right away, if it was worth it to do it sooner, that insider replied, “There’s no real rush. Depends on where they are on projects.”

Gulp.

jkoblin@observer.com

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.

jkoblin@observer.com

More from John Koblin:

The Gilded Age of Condé Nast Is Over

Times Poaches Pulitzer Winner Shadid from Washington Post

The New Yorker Is Hiring

Either way, the summer of guessing games for publishers and
editors is about to end.

“Nobody knows anything for now,” said another source. “What is universally known is that everyone is going to have to cut their budgets significantly next year. Everyone is at work already for different scenarios.”

Budget cuts are expected to vary from book to book. Some might see cuts of 10 percent, others 15, others 20 or more. Books that are in trouble—or that could be on the chopping block—will discover their fates very shortly.

Meetings will begin later this week, though the majority of them are expected to take place next week.

And yet, there’s something in the air this September …

“Everyone has spent the last few weeks and last month dreading the McKinsey thing,” the source continued.

It’s all about to come to a head.

The Observer has learned that McKinsey consultants are winding down their tour of Condé Nast, and will be ready to submit their final recommendations to chairman Si Newhouse and CEO Chuck Townsend in the coming weeks. One source said that recommendations could begin as early as Sept. 16, but another well-placed source said that the “totality of their recommendations” will be given at all once, and that they would come down in the next two to three weeks. 

Through conversations with several staffers who have endured the McKinsey interviews, we’ve assembled a portrait of the typical consultant. First, they’re quite young! Despite the early perception that they’d look like pasty lawyers wielding big-wheeled suitcases, they’re apparently a plucky, charming bunch.

“They’re kind of hot,” said one source.

Crisp shirts, no jackets, freshly pressed pants—not unlike the fresh-faced boys who posed for the Harvard fashion shoot in the Styles pages of The Times this past weekend. They jot notes down on legal pads and in marble notebooks.

But everyone we’ve spoken to seems to know they’ve got a dark side.

“You could tell that they know that there is a lot of waste here,” said another staffer who talked to the McKinsey minions. “The questions they asked were all based on duplications of effort. Things like, ‘Do people really need that?’ ‘What if you didn’t do XYZ?’”

They’ve been focused on job duplications, consolidations, places where corners can be cut to save a few bucks.

McKinsey consultants also seem to have spent the majority of their time with the two magazines they started with: Traveler and Vogue.

Both titles are considered emblematic of the typical Condé Nast magazine. There’s Traveler, the midsize book that’s relatively cost-conscious, and has a sizable bottom line. Vogue is the bigger magazine that brings in bigger bucks, but also has a more extensive expense sheet. Several well-placed sources assured us that even though McKinsey spent the most time with them, it does not mean that they will incur the McKinsey wrath any more than any other magazine.

(We asked Anna Wintour at the U.S. Open on Saturday about how the McKinsey process was going. She said, “Everything is great! O.K., I’m off!” before vanishing into a tunnel).

Either way, November and December issues are closing, and editors and publishers need their budget targets to start seriously planning for 2010.

And what will next year look like?

Condé Nast execs say it’s premature to speculate what will happen, and no one knows—not even Si Newhouse—what the final recommendations will be (CEO Chuck Townsend would not comment for this story).

There have been, however, conversations and presentations between Condé Nast execs and the McKinsey folks all along. “There will be few surprises,” said one source. 

Within the building, one buzz term that keeps popping up is “frequency reductions.” The epicurean titles, Gourmet and Bon Appetit, are most commonly mentioned as candidates for reduced publishing schedules. There is also the possibility that the two staffs could be streamlined.

Another magazine that is being closely looked at is Details, which sources said is the epitome of “a duplication of effort,” thanks to GQ.

Budget cuts are also expected, and could be considerably higher than both the 5 percent cut from last fall, and the 10 percent cut from the spring. Two insiders said they’ve heard about budget cuts in the 20 to 25 percent range, while a high-ranking source said that it would be unlikely for the cuts to be applied across the board to each title (some magazines will need to hit higher percentages, other smaller).

When McKinsey drops by publishing houses, consultants target lavish photo shoots.

“There are little ways of cutting,” said one staffer, who drank a bit of the McKinsey Kool-Aid. “You don’t need to send an entire posse to Joshua Tree for a shot in the desert! Who cares! If the photographer is good, and the clothes are good, the models are good, it’s fine—you can shoot downtown.”

It’s the new way of life.

As Mr. Townsend told us a few weeks ago in an interview, “For the last 15 years we’ve been migrating towards a much, much more business orientation than we have been. Year after year after year, story after story, has been focusing on the fact that we have some definitely fascinating cultural attributes, but I don’t think anybody in their wildest imagination—and I should say me, that I have not—has thought that we have not been migrating this towards a real business. So am I doing anything now that isn’t in keeping with that? Absolutely not.”

Welcome back, everyone. 

jkoblin@observer.com

Sources tell us that those two magazines have been getting a close examination in order to potentially serve as models for how the company will review—or, in CEO Chuck Townsend’s words, “rethink”—its business. When McKinsey hands out its recommendations in October, and Condé Nast’s chairman, Si Newhouse, and Mr. Townsend then issue their dictum to the rest of the company, it is expected that lessons learned from those two studies could inspire what changes are made at the company, two sources said.

The two magazines are believed to be representative business units for the entire company. Vogue, the ad-heavy breadwinner, is seen as being reflective of a bigger magazine. Traveler, with its moderately hefty staff, is smaller than Vogue and considered reflective of a midsize magazine.

If McKinsey and Mr. Townsend can figure out how to maintain the majesty of a brand like Vogue, while also reining in editorial costs (photo shoots, models, hair and makeup, clothing allowances for Anna, and so on), then they’ll feel they can effectively accomplish that for other brands, a source said.

Another source said that more books could be put under the microscope, and those visits could have even wider implications than those with Vogue and Traveler. Sources tell The Observer that McKinsey has recently met with GQ, and that Glamour is also anticipating sitting down with consultants. It is also likely that McKinsey will be spending time with titles that have a smaller profile than Vogue, and with a much bleaker bottom line. In other words: The magazines whose prospects might not be so hot. (Don’t worry about The New Yorker, though: As we reported last week, David Remnick will be exempt from a McKinsey visit.)

As Condé Nast tries to catch up with competition on the Web, both Vogue and Traveler are illustrative of the company’s unusual Web strategy: Vogue is represented online by style.com and Traveler by concierge.com., rather than by their own brand names. Several Condé Nast insiders have told The Observer in recent weeks that Anna Wintour is beginning to the “get the Web,” and perhaps the McKinsey trip helped prompt a sudden awakening.

Last week, in an exclusive interview with CEO Chuck Townsend, we asked if Condé Nast would be meeting with every single editor. “No, I don’t think so,” he said.

He told us that in the next seven weeks, “they are going to meet with as many people as they realistically can.”

For the moment, check Vogue and Traveler off the list.