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?