THE demise of Portfolio, and its $120 million in cumulative losses, has not halted the sense of unease inside the $2 billion Condé Nast empire.
One insider said that many staffers are nervously watching for what might come in July, when Vogue, Vanity Fair, GQ, Glamour and others that have largely escaped the 5 percent reduction in staff will be shipping their September issues.
September is to magazines what Black Friday is to retailing its the time when a magazine can make up for whatever shortfalls it’s had all year and coast profitably to the finish line.
“A bad September will mean they will be forced to take the ax to their huge editorial staffs,” said a former Condé Nast executive.
According to Media Industry Newsletter, Vogue through May is down 31 percent in ad pages, while Glamour is off nearly 22 percent. Earlier this decade, both titles battled it out to become Condé Nast’s most profitable magazine.
Meanwhile Vanity Fair is down 37 percent, fueled in part by a dizzying 52 percent drop in ad pages in the magazine’s May issue.
“Conde Nast is operating the way General Motors did a few years ago,” said a former executive. “They are bloated and out of touch with today’s market.”
With the pain likely to continue, speculation is rampant over what Condé Nast titles may go the way of Portfolio.
Titles that are on the new endangered species list include Architectural Digest, down 49 percent through May; Allure, down 34 percent; and Wired, down almost 50 percent.
“[Condé Nast Chairman] Si Newhouse has ruled by his gut for many a year but he has always been an ad pages up or ad pages down kind of guy,” said the former executive. “They are the only company that has yet to make a penny off of digital — and they’ve been at it for over a decade, as long or longer than anybody else.”
Added an insider, “Something has happened here that has set the whole place on fire. I don’t know if it is just a scared Newhouse family reacting to the economy or if something else has happened. But something seems to be afoot.”
Forbes estimated that the Newhouse family fortune, which is headed by Si and his brother Donald, has declined by 50 percent to $4 billion from $8 billion over the past year. The family’s assets are controlled through parent company Ad vance Publications.
A big problem for Ad vance is the dozen or so daily newspapers it owns, including the Staten Is land Advance, the Star- Ledger in Newark and the Cleveland Plain Dealer. All are wheezing, and as one executive noted glumly, many of the big retail advertisers in the papers have disap peared entirely as a result of the recession.
Meanwhile, Condé Nast finds itself in a similar position as it sorts out whether its advertisers have pulled back for good.
Last year Condé Nast CEO Charles Townsend urged publishers not to cancel vacation plans during the summer because there was not much that could be done.
This year, the human resources department toyed with the idea of Furlough Fridays — without pay — throughout the summer. The idea was shelved.
But it hasn’t stopped the speculation about what Condé Nast might do with summer hours, when magazines let most staffers take a half day with pay on Fridays.
Then again
Former Portfolio Senior Editor Bob Roe can now claim he’s been dinged by Condé Nast twice.
The first time happened last year when he was forced out as a senior editor at Portfolio after famously feuding with then-editor Joanne Lipman.
Then this week it happened again when Wired Editor-in-Chief Chris Anderson on Monday offered Roe the mag’s No. 2 editor’s job and then rescinded the offer yesterday.
According to sources, the speculation is that Condé Nast’s human-resources department wants to fill that slot with one of the 41 displaced editorial workers from Portfolio, thus saving the company from paying severance to that individual.
When we called Roe to confirm the story yesterday, we learned that he intended to turn down the Wired offer anyway because it would have meant relocating to San Francisco.
Roe’s wife Nancy Haas is about to start a new job at Bloomberg in New York.
Silver lining
Speaking of severance, it turns out that there’s a silver lining for those who were cut loose from Portfolio this week.
According to sources, the send-off package is more lucrative than insiders were expecting.
They can thank the federal Worker Readjustment and Training Act, which requires employees be given three months’ notice if a company with 50 or more employees is shutting down.
Portfolio had 85 employees, and all were told that their last date of employment was July 27 — exactly three months after the company decided to close the magazine. As a result, all pay and benefits remain in effect until then.
It is only after that date that Condé Nast will dole out its own non-mandated severance of two weeks’ pay for every year of work. The magazine only published for two years, but a handful of workers were there for a year before the official launch.
The news seemed to hold down some of the internal grumbling.
Still, one soon-to-be severed employee said, “Don’t give Condé Nast too many kudos — they are only doing what they are required to do under federal and state law.”
Shrinkage
More signs of the screws being tightened at Wenner Media: Men’s Journal, which owner Jann Wenner recently or dered to shrink from its oversized format into a standard magazine size — is also cutting back two more issues and going to a frequency of 10 times a year.
“For Men’s Journal, going to a 10-issue frequency was a good way to control costs with as little disruption as possible to our readers and advertisers,” Publisher Francis Farrell said.