Condé Nast has hired the consultant group McKinsey & Company to help “rethink” how the company does business. This is by far the biggest step Si Newhouse has taken to fix the struggling publishing company.
In a memo just sent out to Condé Nast employees, CEO Chuck Townsend writes that the hiring of McKinsey, along with an internal review among Condé Nast executives and publishers, is necessary to “develop new perspectives” on how to generate money.
Since last October, Condé Nast has been making gradual cuts. First, it asked that all books cut 5 percent from their budgets; then, a few months later, publishers were told to cut an additional 10 percent. It led one Condé Nast publisher to confess to us, “We half-assed the cuts last year.” That publisher, along with several Condé Nast sources, painted a picture of a company making quick fix decisions instead of coming up with a compehensive plan on how to weather the storm that has hit all publishing houses. The strategy went: cut now, hope things turn around later.
“This is a considerable and complicated task, forcing us to rethink the way we do business in many instances and incorporate efficiencies in every step of our process,” Mr. Townsend wrote in the memo.
He said every book, ranging from The New Yorker to Vogue to Vanity Fair to the bridal magazines, would be included in the process.
He said a committee of people would be involved, and McKinsey & Company has been hired to advise the review project.
The memo comes only hours after Morgan Stanley issued a report that said that advertising in the media sector could actually improve. Several media companies, such as CBS and The Times, saw their stock rise today after the report was released.
Here is the memo:
The US economy has contracted at a rate not seen in 80 years, forcing companies across America to adjust to the reality of this major economic setback. Our company and our brands have weathered this storm. However, we are not immune to the effects of the substantial revenue losses resulting from the deep and prolonged recession. Consequently, we must realign Condé Nast to be a successful business in an emerging economy that is now predicted to be painfully slow in recovering.
This is a considerable and complicated task, forcing us to rethink the way we do business in many instances and incorporate efficiencies in every step of our process. Beginning this week, I am dedicating myself and a team of my colleagues to this project. We will work with consultants, including McKinsey & Company, to develop new perspectives on optimizing our approach to business, growing revenues, and enhancing our brand assets. All areas of Condé Nast will be included in the study.
There is no doubt in my mind that the strength of our brands and people will provide us with the opportunity to participate in America’s economic recovery. Ensuring our financial health is paramount to our ability to be part of that process.