Illustration: Jason Seiler

About six years ago, Tom Florio, then the publisher of Vogue, had an idea. He wanted to expand the fashion bible’s brand into a new platform: online television. The magazine’s discerning editor-in-chief, Anna Wintour, approved and Mr. Florio found blue-chip financial investors who did too. He’d been working on the proposal for nine months when he presented it to Si Newhouse, Chuck Townsend and other top Condé Nast brass.

“I hate it,” Mr. Newhouse said.

Encountering Mr. Newhouse at a dinner party a few days later, Mr. Florio asked the Condé Nast chairman to elaborate on his abrupt dismissal of the idea.

“All that did was make money,” the boss told him.

It’s hard to imagine the executive who would utter such a sentence in today’s economy (let alone one tasked with navigating the turbulent media market). But the story exemplifies what some say is the defining brilliance of Mr. Newhouse: his quickness to tear a book up, to unceremoniously fire and replace someone (see: Vreeland, Diana, or Mirabella, Grace), to say “no.”

“He makes decisions based on what the essence of Condé Nast was,” Mr. Florio, now CEO of Advanstar Fashion Group, explained.

It’s certainly the signature trait that enabled him to build his stable of glossies into one of the most influential corporate architects of consumer aspiration. But as luxury print advertising—the company’s lifeblood—continues to dry up, Condé Nast is reprogramming its top brass to say “yes”: to brand extensions, such as e-commerce relationships (GQ and Nordstrom), membership programs (Lucky Rewards) and licensed merchandise (Bon Appetit for Home Shopping Network).

Though the 84-year-old Mr. Newhouse remains the company’s chairman and is still regularly spotted in the cafeteria, insiders say his presence is less common and his day-to-day influence quickly waning. The upshot is that the editorial old guard of Condé Nast is losing its best defender, prompting some to wonder if it the company’s “essence,” the ineffable lustre that long captivated advertisers and readers, will survive its 2015 move downtown to 1 World Trade.

Some signs of drift are more apparent than others. Employees have become accustomed to the sight of busted banquettes in the once-gleaming Frank Gehry cafeteria, for instance. “That was the symbol of the luxury of the place,” noted a long-time staffer, adding that the food has also become less appealing. “I think they just stopped caring,” the staffer said. “I think something happened where they were like, ‘I’m not spending any more money.’”

And according to some male editorial employees, even the elevator eye candy isn’t what it used to be. As one put it, “You do sense that maybe one of the weird by-products of the ‘Death of Print’ is that girls in sundresses don’t all flock here quite as much.”

The result seems to be a corporate culture that has lost its edge. “You sense a little bit the loss of that swagger, the feeling that ‘I’m working in some special place,’” the employee added with a sigh.

At this rate, how long will it be before the aroma of garlic—which Mr. Newhouse views with such vampiric scorn that it has been banned from the lunchroom—is wafting through the hallways?

THE ELDEST SON of self-made newspaper mogul Samuel Irving Newhouse, Samuel Irving Jr., aka “Si,” knew a thing or two about aspiration. Born rich but chronically unstylish (surrounded by clotheshorses, he favors a sweatshirt), he left something to be desired as an heir apparent. As a student at Horace Mann and Syracuse, he was ambivalent about journalism, introverted and angsty, according to Carol Felsenthal’s biography, Citizen Newhouse. Living in New York after dropping out of college during his junior year, Mr. Newhouse earned a reputation as the family’s “crowned prince,” racking up bills at 21 and the Stork Club while his younger brother, Donald, demonstrated an affinity for the family business at papers like the Newark Star-Ledger.

Condé Nast was an afterthought investment that Newhouse Sr. snapped up as birthday gift for wife Mitzi in 1959, and therefore not considered a suitable perch for junior. But it was there—under the influence of elegant and brilliant editorial advisers like Leo Lerman, the man of letters whose epic house parties earned him a spot on the Mademoiselle masthead, and Alexander Liberman, the Russian-born artist whose judgment even the most headstrong editors trusted—that Mr. Newhouse found his calling. Lerman and Liberman gave Mr. Newhouse access to the kind of artistic high society from which he’d previously felt excluded. Enthralled, Mr. Newhouse threw himself into the work, serving in positions at Glamour and Vogue, reading every line of the magazines, and to the chagrin of his colleagues, showing up before dawn.

When Liberman wasn’t tearing up his editors’ pages, he was teaching Mr. Newhouse what contemporary art to hang on his walls; the collection eventually earned Mr. Newhouse a spot on the board of MoMA. Liberman also imparted one of his signature managerial gifts: identifying talent. Mr. Newhouse watched Mr. Liberman lure Vreeland from rival Harper’s Bazaar with the promise of a bottomless expense account, then made a name for himself poaching Tina Brown, the young editor of Tatler for his revived Vanity Fair.

Mr. Newhouse learned to spot gifted editors practically in utero. “It was often at such an early stage that other people didn’t even realize it was talent,” Mr. Florio said, recalling the days before Tina was Tina. “She was not all fancy and fashionable but she was wickedly irreverent, super brilliant and funny.”

He then kept that talent on its toes by being selective and unpredictable with his attention.

“I always admired that in a board roomful of talking executives that he would quietly listen to what was not being said and then provide the most meaningful comment of the meeting,” former Details publisher Steve DeLuca, now the publisher of Departures, told The Observer.

But while Mr. Newhouse’s shifting affections made Condé Nast a hotbed of competition, where alpha salesmen (and tabloid regulars) like the late Steve Florio (Tom’s older brother), Ron Galotti and Richard Beckman thrived, a series of appointments and hires over the past two years have dramatically altered the character of the company’s leadership.

At the top, there’s Chuck Townsend. An operations-minded backslapper whom sources say earned major brownie points when he streamlined the company by moving its back offices to Delaware, Mr. Townsend ascended to CEO and president in 2004 when Florio, who suffered from heart problems, stepped down. (He died from a heart attack four years later.)

Two years ago, Mr. Townsend relieved himself of the president half of his job title, handing it off to Bob Sauerberg, Condé Nast’s top consumer marketer (thank him for the subscription cards all over your apartment floor), with whom Mr. Townsend had worked at The New York Times Magazine group in the ’90s. Mr. Sauerberg was tapped just as David Carey, a brainy publisher credited with turning The New Yorker around, departed for rival Hearst and dynamic personalities like Mr. Florio (Steve’s brother) and Mr. Beckman fled in search of CEO gigs.

According to insiders, Mr. Sauerberg promised the Newhouse family board that controls the company that he would bring in millions in non-advertising revenue, while magazine publishers would continue to report to Mr. Townsend. Mr. Sauerberg’s appointment signaled a sea change. In a 2010 internal memo, he foretold “a consumer-centric business model, a holistic brand management approach and the establishment of a multi-platform, integrated sales and marketing organization.”

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.

editorial@observer.com

1. Rupert Murdoch

2. Ted Turner

3. Si Newhouse

4. Charles Dolan

5. Barry Diller

A. $1.9 Billion

B. $6.2 Billion

C. $2.5 Billion

D. $1.2 Billion

Answers: (1.B); (2.A); (3.B); (4.C); (5.D)

In keeping with last year, Bill Gates and Warren Buffet held the number one and two spots, respectively. 

Other New Yorkers who earned spots on the Forbes list include Si Newhouse and Rupert Murdoch — who are tied at 28 — Ralph Lauren at 60, and Donald Trump staying modest at number 153.

Perhaps with the extra cash David Koch can give more money to NOVA, the PBS science show that he helps bankroll. Hey, the kids have to be convinced of the non-existence of global warming somehow. 

Last year, after Conde Nast made the surprising decision of closing Gourmet and retaining Bon Ap, Ms. Fairchild was hailed as sort of a forgotten hero at Conde Nast. Apparently, her position as the only editor of a food magazine at Conde Nast will be short-lived.

The news about Ms. Fairchild's departure was lumped into a press release that announced that the magazine, like Architectural Digest, would relocate from the west coast to New York.

"The move of Bon Appétit's editorial headquarters to New York is part of the company's continuing efforts to strategically align our brands for future growth and to enhance efficiencies and coordination by consolidating our assets," said Mr. Townsend, in a typically cold Townsendian statement.

Ms. Fairchild had been editor for 10 years.

This has been a busy season for Conde Nast editorial director Tom Wallace. In the last six months, the company has named new editors at W, Lucky, Architectural Digest, and removed and replaced Patrick McCarthy with Peter Kaplan as the head of Fairchild.

In other words, Mr. Sauerberg has a very important job now for a company that is quickly trying to figure out how to handle a future that relies less and less on the printed product and printed advertisements. After key Conde Nast business executives departed this year — Tom Florio, Richard Beckman, and, most recently, David Carey — a little corporate reorganization is necessary (we wonder if Conde's friends at McKinsey had any role in advising this decision; sources have told us that consultants been back in the building in recent weeks). It also gives Mr. Sauerberg the role as a clear no. 2 to Mr. Townsend, the first time since Mr. Townsend was appointed CEO that there has been such corporate organization at Conde Nast. Meanwhile, Louis Cona has been promoted to Chief Marketing Officer, in another bump up the corporate ladder.

Interestingly, all of Conde's promotions came from within, and it also allows (speculation time!) for a clearer guess at who has the lead in becoming Mr. Townsend's successor when he finally does decide to step down as CEO.

Here is the full release:

CONDÉ NAST ANNOUNCES SENIOR LEADERSHIP CHANGES AND PLANS FOR GROWTH
ROBERT A. SAUERBERG NAMED PRESIDENT

New York, N.Y., July 23, 2010—Condé Nast is charting a new strategic course as a consumer-centric media and entertainment company in order to accelerate growth, it was announced today by Charles H. Townsend, Chief Executive Officer, of Condé Nast.  The company will be realigned to better embrace and harness developing technology; broaden consumer touch points; and create contemporary value propositions for advertisers.  To achieve these strategic priorities, several senior leadership changes were announced.
 
Mr. Townsend will remain C.E.O., with continued responsibility for the entire company, reporting to S.I. Newhouse, Jr., Chairman.  He has appointed Robert A. Sauerberg as President of Condé Nast.   Mr. Sauerberg, formerly Group President, Consumer Marketing, will work with Mr. Townsend in overseeing the company’s business activities, but his primary responsibility will be to move the company to a new business model focused around digital connectivity, technology development, and consumer insight. He will integrate corporate resources to support brand development initiatives and deliver maximum value to consumers, advertisers and employees. 
 
“The historical priorities that have served our company so well—great content, best-in-class magazines, key client relationships—remain the cornerstone of what we do, but we need to move beyond the magazine,” said Mr. Townsend.  “The set of strategic course changes being put in motion today will reorient our organization to thrive in this new world of opportunity, assuring the brightest future for Condé Nast.”
 
“Having worked closely with Chuck over the last two decades, I’m looking forward to implementing this growth agenda together,” said Mr. Sauerberg.  “These new strategies will enhance our innovation, extend the reach of our content and offerings, and improve our speed-to-market.”
 
With the increased financial management necessary for a growing breadth of products and services, John Bellando will assume the Chief Financial Officer title in addition to his current responsibilities as Chief Operating Officer.  Mr. Bellando will oversee the corporate fiduciary responsibilities for Condé Nast, Fairchild Fashion Group and Parade.

Louis Cona, currently Executive Vice President, Condé Nast Media Group (CNMG), will become Chief Marketing Officer.  He will engineer the evolution of CNMG into a seamless, multi-media, multi-platform sales and marketing services facility.  Mr. Cona will oversee the integration of the company’s print, digital, social, e-commerce, consumer insight and other assets to create comprehensive marketing solutions.
Thomas J. Wallace will continue to play the critical role of Editorial Director, working closely with the creative engine of the company—the editors of Condé Nast’s award-winning magazines—in developing creative brand strategies.

“We’re clear on the vision of where we need to be, and have the right executive team in place to get us there,” Mr. Townsend added.  “They are a tried and tested team with the experience, knowledge, and expertise to drive the change necessary to realize our goals.”

Condé Nast, a division of Advance Publications, operates in 25 countries. In the United States,
Condé Nast publishes 18 consumer magazines, two trade publications and 27 websites that
garner international acclaim and unparalleled consumer engagement.

Though Mr. Kaplan emphasized again and again that he is not taking over any sort of daily duties at WWD, and that he has the greatest respect for the staff and editor Ed Nardoza, the move from Traveler to the Fairchild offices on Third Avenue does mean that Mr. Kaplan gets back to what he loves: working with a paper.

"It's the other newspaper in town that's a five day a week daily paper," said Mr. Kaplan. "They've got a great staff and an excellent editor. It's a thrill for me."

"It hugely appealed to me for two reasons: One of them is all the stuff I was talking about at the end of the Observer. A lot of the Fairchild publications seem ready-made to point forward. They are these incredible media propositions. And they have the same sort of nimbleness that we had at the paper. They have a similar sized staff and there's not a massive bureaucracy. You can take the content and repackage it and refocus it and think it through for a new generation of readers."

Which leads us to his second point!

"There's a new generation of readers coming up and they'll be reading Women's Wear and these other publications, and they want a first-rate web site, and they're gonna want something for the iPad. They want apps! The fashion people spend their lives thinking about how to get ahead of the culture"

"[The publications] should look beautiful and, in print terms, they do, but electronically they should be gorgeous," he continued.

Mr. Kaplan said that he's been a Women's Wear Daily reader since he was a boy.

"Red Smith used to have a column there," he said, referring to the legendary sports columnist. "That's why I started reading Women's Wear. It was before he went to The Times, and after, I think, the Herald Tribune."

He complimented the staff once more and said, "I've loved it since I was a little boy."

He starts on August 2nd.

Conde Nast is interested in moving into the tower, and now that Mr. Durst has his hands on the tower, it makes the possibility of a move far more likely. Mr. Durst owns 4 Times Square, and would be the position to allow Conde Nast to break its current lease and move into One World Trade Center in three years, when it is scheduled to open.

Eliot and I wrote about this last month:

Why would Condé look for a new home, just after helping to remake Times Square? Money!

"Why look for new space as opposed to stay here?" said a Condé Nast executive, speaking at 4 Times Square on Tuesday. "We're paying below market rent here, and at some point, it goes to market. That's a huge jump. When we moved to Times Square, market rent was nothing like what it will be when our lease expires."

Condé Nast signed a deal with developer Douglas Durst in 1996 for rents that made sense in the Giuliani years. (One real estate source pegged the lease numbers in Condé Nast's first year of occupancy in 1999 to be somewhere around $35 per square foot. Rents for the newly opened 11 Times Square, down the block, are reportedly in the high $70s.)

First up, welcome special editions! On the heels of reviviving the Gourmet (for an iPad app), Conde Nast is continuing the branding and licensing of its titles by introducing special editions for the New Yorker, Vogue, Glamour, Bon Ap and GQ. The special editions will be sold in stores and on newsstands later this year, and will target popular features in the magazines. For example: "The special editions will build on the popularity of Condé Nast's award-winning magazines, but will focus on more narrow topics or features, such as Glamour "Dos & Don'ts," packaged in a creative and attractive way," said the press release. "Up to six Condé Nast special editions are planned for the second half of 2010 with the first expected in August."

They're expecting most of their revenue from the consumer, but they said they're hoping for some ad deals too.

Vanity Fair today also introduced an iPhone app on movie trivia, featuring "Little Graydon." This is one is free, and has an ad deal from Bing.

"Five minutes into the conversation today, he just got it," said Mr. Carey in a phone interview with The Observer. (We wonder what those first five minutes looked like!)

Mr. Carey is currently spending his last week at Condé Nast. The details are still being ironed out, but he said he will likely be starting at Hearst next Tuesday, July 6.

"This is the plummest of all assignements for me," he said. "Hearst operates entrepreneurially and when you see what they're doing in terms of innovating and taking risks—but they have scale and resources at the same time—that is a very exciting thought for me."

"It's just a fantastic opportunity," he continued. "It's tailor-made for me."

Conde Nast has gone through quite a leadership shake-up in recent months. Tom Florio announced he was leaving two weeks ago because he wanted to be a CEO of his own company and that wasn't going to happen at Condé Nast. Richard Beckman left because he could become a CEO somewhere else. After Mr. Carey lost Portfolio magazine last year, he has been in charge of magazines like Wired and Golf Digest, and cooking up branding schemes for Condé Nast. It seemed like he either needed something more to do at that company, or something more to do elsewhere. Now he has a chance to run a magazine empire.

"It doesn't say something about Condé Nast," said Mr. Carey, about the recent departures. "It says something about the individuals. These are executives who have been at the company for 15 to 25 years. You have a group of executives who are all around 50 and who have been well trained and are deeply entrenched in the industry and are ready to run their own shows."

Mr. Carey said an important reason of why he left—other than it being a big career step—was the "people piece." That is, he really likes the people over at Hearst already. He said that Hearst CEO Frank Bennack gave him his first gig as a publisher, and that both Hearst editorial director Ellen Levine and Hearst newspapers chief Steve Swartz are close friends.

"I know where I'm going, and it's very comfortable," he said.

Chuck Townsend, through a spokeswoman, said, "I have tremendous respect for David and we wish him well."

EARLIER: JOHN KOBLIN'S 2008 PROFILE OF DAVID CAREY

It's an experiment for Conde Nast: They'll take a magazine they folded (because they said it lost too much money) and replace the printed product and the employees they laid off there with a big internet community. And the Gourmet archives.

The "Gourmet Live" app won't launch until the fall, but you can take a look at a demo at live.gourmet.com.

The application will rely mostly on the archives of the Gourmet brand. In a demo shown to reporters this morning, we found the legendary "Consider the Lobster" story by David Foster Wallace, and a video of a recipe with John Doc Willoughby, the former executive editor. There's a decades-worth of content, but we wonder if it'll feel — pardon the expression — a little stale after a while.

Ruth Reichl, the editor of Gourmet from 1999 to 2009, was not at the press conference. At the briefing, her name wasn't uttered once. On her twitter this morning, Ms. Reichl wrote, "they're reviving the brand, not the magazine. Pity."

It's a logical experiment for Conde Nast. If they're going to to try to create a digital enterprise, why not make it (1) food-related, where, according to Conde Nast, 60 million uniques a month are trawling the web in search of food content and (2) use a brand name that's so iconic?

"Ca-ching! Thank you very much, if you will," said Conde Nast CEO Chuck Townsend, at one point in today's press conference describing the success of Wired's app for the iPad.

Mr. Townsend was sporting a blue blazer, a nice buttondown and a healthy tan (Bob Sauerberg, the Conde Nast group president who also spoke, wore a nearly identical outfit).

Mr. Townsend obviously hopes there will be a similar success with this app. He said this is a technology and revenue play for the company, and said specifically it's not a magazine or a digitized version of the magazine.

You'll be able to download the app for free, but then you'll be paying for things along the way (everyone was particularly excited about virtual currency). You can check out recipes, videos, stories and you'll also be able to take a look at a map and Gourmet reviews of a particular restaurant along the way.

But as Mr. Townsend emphasized — and which was reiterated by their partners at Activate, a technology consulting company — this is all about making a web business, even if it is creating a new one by using all the leftovers.

Ca-ching?