Why "Gourmet" Was a Recipe for a Disaster - Steve Blacker - MediaBizBloggers

Disclaimer: I worked at Conde Nastfor six years as SVP Market Research until 2001; I was let go by Steve Floriowho had originally hired me. I have a high regard for most of the editors, publishers and other corporate executives I know there.

Conde Nast brands are some of the most powerful in the business. Think about it. Vogue, Glamour, Gourmet, Vanity Fair, The New Yorker, GQto mention just a few. Theknot.com is profitable and less than a decade old. Conde Nast had three major bridal publications and could not launch a profitable Web site over the past 10 years? That's the major problem.

Chuck Townsendis probably one of the smarter media executives in the business today. Chuck is a no nonsense, strategic thinker with tremendous focus and the ability to solve problems ahead of time. Unfortunately, he has a shadow manager, Si Newhouse, who starts each day at 4:00 AM and micro manages the company. Si's focus is totally on the old business model (e.g. are pages up or down?)

So what's the problem? Gourmet's September issue's masthead lists 111 full time staff members! The major departments are ad sales and marketing with 33, and editorial, art and production, also with 33 people. By comparison, online has just two full time staffers backed up by 12 contributing editors and 4 correspondents. Given the strength of the Gourmetbrand, what other magazine closing would have made the front page of the New York Times? The fact that it could not develop a profitable digital strategy was a major problem.

NEED TO DOWNSIZE PRINT & GROW DIGITAL

The September issue was a scant 116 pages and contained 6 different advertising sections. Did Gourmetneed so many editorial people to produce a monthly magazine that was mostly picture and recipe driven? And so many ad sales and marketing people? By contrast, Saveur,owned by the profitable Swedish Publisher Bonnier, is produced and marketed with almost 50% fewer people, and is a very classy looking magazine. Gourmet'srate base was an unrealistic 950,000. Even with newsstand off over 20% this past year circulation grew via cut rate subs. By charging subscribers more Gourmetmight have had to reduce its rate base to 700,000. Conde Nast needs to figure out how to have profitable print businesses with realistic rate bases while growing digital.

THE CORPORATE CULTURE

While Chuck Townsend knows what to do, his boss, the benevolent dictator Si Newhouse, seems slow to want to make the draconian changes that are necessary. Si has run Conde Nast more as a hobby than a real business.

He treats his star editors and publishers like movie stars of some bygone Hollywood era. Car services were so abused when I was there that one top editor used them to deliver his Christmas cards. While executives at Time Inc., Hearst and Meredith often rode the subway Conde Nast's had black Mercedes servicing them 7 days a week, including trips back and forth to the Hamptons. Corporate executives approved their own expense accounts. Business and first class air travel were the norm. How could one not become pampered and self-indulged working in such an environment? Publishing reality and any realistic business model was lost in the dream land of excess, extra pages, above industry salaries and virtually every perk imaginable. Even regular staffers used car services. If Chuck Townsend was truly in charge, instead of Si, the company would be run much more like a business with a greater emphasis on making digital a real profit center with unlimited growth potential.

Si had the guts to stay with Vanity Fair& The New Yorker. But unfortunately Si did not listen to others when he relaunched House & Gardenand launched PORTFOLIO in the midst of a major recession and sea change for print media caused by digital. Si continued to focus on pages as more and more advertisers were putting their money into digital. While Conde Net was launched way before anyone had gained a major toe hold in digital, its strategy was obtuse from the get go.

Rather then marketing their well-known brands, Conde Net created new ones. And even though the executives in charge had major budgets and large staffs, no one really held them accountable. In fact they are still in charge of digital today. Unlike Rupert Murdoch, who acts quickly when he sees a problem, Si seems reluctant to move too quickly. The big question is whether Si will let Chuck Townsend and John Bellando make the necessary business decisions and dramatically slash existing budgets across the board. Anna Wintour is a great editor but she has a staff almost 3 times the size of ELLE.

UNREALISTIC RATE BASES DO NOT CREATE QUALITY MAGAZINE AUDIENCES. Gourmet's most recent rate base was 950,000.When a magazine grows beyond its natural core audience it will lose its quality demographics making it much less appealing to advertisers.

THE FUTURE CONDE NAST - IF IT IS TO BECOME PROFITABLE AGAIN.

Lower rate bases; higher sub prices; major staff reductions; no more car services; one staff to produce all content, print and digital; major reduction of individual magazine sales and marketing staffs (most pages sold are part of corporate packages); one sales and marketing staff for print and digital; fewer corporate executives; a new management team for digital; basically learning how to exist profitably with the great brand stable they still have left. Consider folding Fairchild into the Advance Management structure to eliminate the high executive salaries that currently exist.

Will the current publishers, editors & corporate executives be able to change? That is an unknown question. Given the high salaries Conde pays people they should have no problem attracting people with the know how to take their great brands to the next level. Si loves magazines; can he fall in love with digital?

Steve's new book You Can't Fall Off The Floor - The Insiders' Guide to Re-Inventing Yourself and Your Career chronicles his 50 year career working for over 25 different companies with 189 lessons learned and insider tips from Gayle King, Cathie Black, Chuck Townsend and 28 others; Blacker is still going strong today as a partner in Frankfurt & Blacker Solutions, LLC. His web site is blacker-reinventions.com and e-mail address is blackersolutions@aol.com

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