For the first time in nearly two decades, the Newhouse family is personally having to underwrite the losses at Condé Nast, a source told The Post.
It’s one of the reasons for the intense cost-cutting at the glitzy — and historically profligate — magazine publisher run by billionaire Chairman S.I. Newhouse Jr.
“It’s not just Si now,” said the source, who is close to Condé Nast. “It’s the family trust.
“Si hates to lose money, and Si hates to lose money that he wasn’t planning to spend.”
Some industry observers predict losses at Condé Nast may hit $200 million this year, as the company is reeling from an advertising-revenue shortfall of more than $400 million.
Newhouse having to dip into his own pockets to keep Condé Nast going comes at a time when his personal fortune has declined by about 50 percent in a year to just over $4 billion, according to Forbes.
Generally, the family and its top executives are loath to talk about profits and losses. But in a rare admission, Condé Nast CEO Charles Townsend said the company will lose money in 2009.
“We are having a very painful year,” he said this week. He also insisted losses are not anywhere near $200 million.
In making deep expense cuts, Townsend appears determined to avoid the types of mistakes that a past Condé president, Bernard Leser, made in the early 1990s, when the company was slow to react to the ad falloff.
Eventually, Leser was shipped off to run Condé’s Australian operations, and was replaced by Steve Florio.
Townsend this summer hired management-consulting firm McKinsey & Co. to advise on cutting costs, and has shut down six magazines: Domino and Portfolio earlier this year, and Cookie, Gourmet and two bridal magazines just this week.
Onetime costs tied to severance and magazine closures will make the company’s financial picture much worse.
In total, Condé Nast has laid off about 400 employees, including the 180 who got pink slips this week.
When Time Warner in late 2008 laid off 600 people from its Time Inc. unit, the company took a $176 million charge against earnings.
Condé Nast, faced with similar costs, could have to take a write-off of around $117.2 million.
But working in Condé Nast’s favor is that the publisher has always been debt-free. And Newhouse, while owning three homes, isn’t viewed as being as showy as other billionaires.