The Condé Nast Publications Inc.

views updated

The Condé Nast Publications Inc.

350 Madison Avenue
New York, New York 10017
U.S.A
(212) 880-8800
Fax: (212) 880-8086

Wholly Owned Subsidiary of S. I. Newhouse, Inc.
Incorporated: 1922
Employees: 2,000
Sales: $330 million (estimated)
SICs: 2721 Periodicals Publishing & Printing

The Condé Nast Publications Inc. (CNP) is one of the world’s foremost publishers of specialized magazines, spanning topics as diverse as high fashion, home decoration, travel, sports, literature, social life and commentary, gourmet cuisine, architecture, and popular culture. Building on the success of his flagship Vogue magazine, which he bought in 1909, founder Condé Nast (1873-1942) established a virtual magazine empire that helped shape the opinions and tastes of readers around the globe. By the mid-1990s, the company boasted more than thirteen high-profile publications, including Vogue, House & Garden, Architectural Digest, Glamour, Mademoiselle, Bride’s, Self, Gentlemen’s Quarterly, Vanity Fair, Gourmet, BonAppétit, Condé Nast’s Traveler, Details, Allure, ana Street and Smith’s Sports Group, and planned to introduce several online publications.

The energy that allowed Condé Nast to launch such a wide variety of magazines also helped him pioneer the magazine industry in general. He combined innovative publishing theories with a flair for nurturing both readers and advertisers. Condé Nast’s most enduring contribution to the publishing industry was his development of the concept of specialized, or “class,” publications directed at particular groups of people with common interests. Through careful marketing and selective editorial management, such publications shunned attempts to gain bulk readership in favor of attracting select, and ultimately more devoted, readers of a given persuasion or social profile. As Condé Nast pointed out in his 1913 essay “Class Publications,” the population of the United States—90 million at the time—“divides not only along the lines of wealth, education, and refinement, but classifies itself even more strongly along lines of interest. ... A ‘class’ publication is nothing more nor less than a publication that looks for its circulation only to those having in common a certain characteristic marked enough to group them into a class.”

For Condé Nast, a specialized publication required absolute determination of purpose. “It takes the farsightedness and the utmost fixity of purpose,” he continued in his landmark essay, “to prevent any really good class publication from growing into a general magazine and thereby diluting its circulation enough to defeat its own ends.” As the science of marketing research advanced—aided by improvements in survey techniques and communication technology—and allowed publishers to identify and target special-interest groups, Condé Nast’s unconventional recipe became the undisputed norm in magazine publishing.

The success of Condé Nast’s fashion-driven publications was mirrored—and partly secured—by the charm and polish of the man himself. His family, of mixed French and German stock, had settled for several generations in the United States. Condé Nast was strongly influenced by his aristocratic French mother, who infused him with the calculated manners and social restraint of high social circles. His father lived mostly abroad and died young, leaving much less, if any, influence on his son. As an adult, Condé Nast was noted for his urbane persona. He was always exquisitely groomed and well-mannered and seemed in total command of his faculties. Allegedly, he never raised his voice or used angry words. “If situations became too fraught, Condé would become surprisingly difficult to find,” according to Madge Garland, fashion editor of Vogue in the 1930s, in a 1982 book review for Financial Times.

Such honorable charm was at odds with some of Nast’s other reputed trademarks, including manipulative or discriminatory treatment of his staff and an ostentatious lifestyle. Though in debt millions of dollars, for example, he maintained a 30-room apartment and held stylish parties for the rich and famous, while at the same time he cut staff salaries and positions. Still, Condé Nast’s determination to produce near-perfect magazines and to capitalize on the money-making potential of fashion remained constant. “If one had to choose one individual who has had more influence than any other on the way women in the Western world dress and arrange their homes, it would be hard to find a rival to Condé Nast,” Madge Garland declared in the Financial Times.

Vogue magazine served as the early testing ground for Condé Nast’s “class publication” theories and his business savvy. Vogue was first published in 1892 as a weekly journal of society and fashion news interspersed with verse and lightly humorous drawings. Condé Nast bought the magazine in 1909 with the intention of upgrading it, and he became its active owner-manager. He stuck to his “fixity of purpose” doctrine in order to secure the magazine’s “pure class” standing. Fiction, for example, was not welcome in early Vogue, even though Condé Nast admitted that it would help maintain a larger circulation. “That those who became readers of Vogue because of its news of the so-called ‘smart’ world would be equally interested in the fashions and in all the rest of Vogue’s contents, we were fairly certain; but that all those who might be attracted to Vogue through fiction would be seriously interested in the rest of its contents or in its advertisements, we had every reason to doubt,” he explained in “Class Publications.” By extension, Condé Nast argued that advertisers were also best served by his strategy: advertisements could be tailored to the specific readership of a “class publication” rather than thrown out to the more random, quantity-driven readership of general publications.

Adding to the success of his Vogue acquisition, Condé Nast bought an interest in House & Garden in 1911 and four years later took it over completely. Nast transformed the magazine from an architectural journal into an interior-design authority. In 1914, Condé Nast introduced Vanity Fair, a magazine that quickly set publishing standards in arts, politics, sports, and society. Under the editorship of Frank Crowninshield, Vanity Fair gained a reputation as a sophisticated and glamorous magazine infused with a lighthearted and often acerbic wit. In 1936, the magazine was merged with Vogue —an idea that “stank,” Crowninshield reportedly told Condé Nast—only to re-emerge on its own in 1983.

While publications like Vanity Fair worked to broaden the publisher’s readership at home, Condé Nast was using the popularity of Vogue to lay the groundwork for overseas business. With the introduction of British Vogue in 1916, Nast became the first person to publish international editions of magazines. A French company was established a few years later, followed by the Italian Vogue in the early 1960s. By the 1990s, CNP’s foreign operations included publishing subsidiaries in England, France, Italy, Germany, Australia, and Spain, with licensee arrangements in Mexico, Brazil, and Japan.

Nast also took steps to ensure quality production of his growing family of magazines. In 1921, he bought a small interest in the Arbor Press of Greenwich, Connecticut. That facility eventually became The Condé Nast Press, and was expanded and completely modernized to become one of the finest magazine manufacturing plants in the country. The press closed in 1964, to make way for more centrally located sites capable of producing higher volume.

Despite the rigors of the Depression, CNP forged ahead with innovations in design and quality in the 1930s. Color photographs appeared within the pages of Vogue, Vanity Fair, and House & Garden, and in 1932 the first color photograph appeared on the cover of Vogue. To crown these advances, Nast introduced Glamour magazine in 1939, the last publication that he would personally develop in the CNP collection. By the 1990s, Glamour had become the largest-selling fashion/beauty/ lifestyle magazine in the world. It also gained its share of critical recognition, winning the National Magazine Award for General Excellence in 1981 and 1992, among other distinctions. Few other women’s magazines matched its scope, from politics to personal issues.

The year 1959 marked a threshold in CNP’s growth and diversification, as S. I. Newhouse, the renowned newspaper and media giant, purchased a controlling interest in the company and instituted a changing of the guard in senior administrative positions. With the death of S. I. Newhouse, Sr. in 1979, management of the privately held empire, Advance Publications Inc., was passed on to his two sons. S. I. Newhouse, Jr. (known as “Si”) ran the magazine and book operations, while Donald Newhouse took charge of the newspaper and cable television operations. The magazines belonged either to Condé Nast Publications, Inc. or to Advance Magazine Publisher Inc., which published the New Yorker and the Sunday newspaper supplement Parade. The books fell under Random House Inc. and its subsidiaries.

While Si’s abrupt dismissals of numerous magazine editors won him a fearsome reputation within the industry, he later became known for his relaxed style. By 1992, this intensely private man—who was the boss, brains, and banker of CNP—was “so unprepossessing in appearance that a new executive once mistook him for the office carpenter ... wearing a sweater, no tie and in all probability no shoes,” according to Deirdre Carmody of the New York Times.

The Newhouse leadership of CNP initiated a period marked by acquisitions and overhauls of existing publications, rather than the founding of new publications, in the highly competitive— and uncertain—publishing industry. The same year that S. I. Newhouse acquired CNP, for example, Condé Nast acquired Street & Smith Publications, Inc., which included titles such as Mademoiselle and the Street & Smith’s sports annuals (College Football, Pro Football, Baseball, Pro and College/Prep Basketball).

Two decades later, in 1979, that pattern of Newhouse-style acquisitions continued, as the publisher purchased Gentlemen’s Quarterly (GQ) from Esquire Inc. Founded in 1928 as a fashion booklet distributed in men’s clothing stores, that magazine grew into a preeminent source for probing magazine journalism, fiction, essays, and eclectic coverage of subjects from food to financial planning for the 25-to-39-year-old male audience.

That same year, CNP revisited its old ways by introducing Self magazine, the first publication started from scratch since 1939. Self became a popular sourcebook for women who “are reinventing almost every aspect of their lives from a health-aware, issue-oriented point of view,” according to a CNP brochure. Offering information-packed, fast-read journalism to busy women, Selfs circulation was no less fast-paced: within 30 months of its launch, the magazine reached over one million readers.

From the early 1980s to the 1990s, CNP continued to control an impressive range of magazines, reinforcing its image as a diverse, top-notch publisher. In 1982, the company added to its historical prestige by buying the Taller, a British monthly magazine devoted to social news, the arts, features, and fashion. (CNP had no plans to issue the magazine in the United States.) The first Taller was produced in 1709 by the essayist Richard Steele, who distributed issues free in coffee houses. Though that venture closed down within two years, intermittent publishers resumed Steele’s enterprise until a monthly Taller finally took hold in 1901.

Less than a year after taking on the impressive history of Steele’s Taller, CNP made a comparable move in the United States by reviving Vanity Fair in March 1983. That venerable magazine had been merged with Vogue since 1936. Though the undertaking was widely criticized, CNP invested roughly $10 million toward strengthening the magazine editorially and getting it off to a powerful new start. Building on Cleveland Amory’s 1960 declaration that Vanity Fair had been “America’s most memorable magazine,” CNP packed the lavish first re-issue with an entire short novel by Gabriel Garcia Márquez, winner of the 1982 Nobel Prize for Literature. Its 290 glossy pages also included lively articles by the likes of Gore Vidal reporting from the Gobi Desert, paleontologist Stephen Jay Gould speculating on why .400 hitters have disappeared from baseball, and other gems. That same year, CNP also acquired Gourmet magazine, the oldest and second-largest of the four major American epicurean magazines.

CNP’s appetite for growth was hardly sated with the acquisition of Gourmet, as the company continued to launch new, premium magazines in the late 1980s. In September 1987, for example, Condé Nast’s Traveler, a monthly travel magazine for the affluent, incurred an introductory cost of approximately $40 million. Traveler built on the foundation—but went far beyond the scope—of Citicorp’s Signature. Harold Evans, Traveler’s editor-in-chief, told Advertising Age that CNP would bring to Signature “real journalists” from newspapers like the New York Times. Additionally, Traveler joined the Condé Nast Ltd. advertising sales package, which also included Gourmet and House & Garden.

Travel was not the only domain into which CNP ventured in the late 1980s. In January 1988, the publisher acquired Details magazine, an irreverent chronicle of Manhattan’s downtown art, fashion, and club scene, and transformed it into a young men’s fashion and lifestyle magazine for the 1990s. Later that year, CNP also acquired Woman magazine, an eight-year-old bimonthly with a circulation of 525,000, from Harris Publications. Less sophisticated than CNP’s other women’s magazines, the new magazine would steer into a previously uncharted niche market. And even as the magazine publishing industry continued to reel from economic malaise, CNP started yet another glossy spread, Allure magazine, in March 1991. Devoted entirely to beauty, Allure jumped from a starting circulation of 200,000 to reach 625,000 before its second anniversary, making it one of the fastest-growing magazines of its time. With its unusual combination of high fashion and piquant journalism, Allure was nominated for a National Magazine Award in its first year.

In addition to the editorial quality of its publications, CNP maintained its place atop the magazine publishing industry through shrewd marketing strategies. Building upon Condé Nast’s theories of “class” publications, the company traditionally offered few, if any, cut rates for advertisers. The company believed that its magazines were put together in such a way that little advertising waste was accrued. Appropriate ads could be targeted to the magazines’ select readerships, so ad discounts were not only unnecessary, but counterproductive. Describing the “circulation man” of a “class publication” in his famous essay, Nast wrote: “If allowed to offer premiums at all, he must see that they are very closely akin to the editorial nature of the publication; if he gets into clubbing offers, he must choose his company with the greatest care; he must not offer commissions that will tempt magazine agencies to force his circulation; he must not on any account cut his rates.”

As late as 1990, CNP upheld its rule of never cutting rates. In 1991, the company began offering advertising buying combinations that provided added value to advertisers, such as the Package of Women and the Ltd. Package. “With an overall marketing partnership they’re doing something more creative, it makes doing business with them easier for us, and they can increase business without cutting rates,” George Hayes, director of the Comcord Group at McCann-Erickson, explained in Mediaweek.

CNP’s policy was not without its controversies, however. In fact, CNP engaged in a highly visible conflict with General Motors Corp. regarding advertising rates in late 1989. GM began a boycott of CNP magazines when the publisher refused to restructure its rates at a discount as demanded by GM. With an advertising budget amounting to approximately $266.2 million for magazines alone, the standoff represented a substantial amount of money for both parties. In March 1993, however, CNP announced its Condé Nast Select package, which set new discounts for multi-title and multi-package buys. Though Phil Guarascio, GM’s general manager of marketing and advertising, allegedly wanted special treatment beyond that package, the companies resumed negotiations. After a five-year boycott of CNP, GM returned to the books in August 1994 with fall advertising pages and planned an extensive schedule for 1995. Mediaweek stated that CNP would receive some $20 million in advertising business from the car company.

Also in 1994, CNP overcame its long-standing aversion to such deals and launched four custom publishing projects for outside clients, with plans to develop even more revenue-producing projects. Custom publishing was part of a big push, initiated by CNP president Steven T. Florio, to develop a new corporate franchise for the privately held company, including event marketing, group sales, and minority investment in magazines. Such a strategy marked a notable reversal of the publisher’s traditional adherence to “the sanctity of its core products,” according to Melanie Warner of Inside Media.

Custom publishing was one of numerous initiatives at CNP to secure its image, circulation, and ad revenue. In June 1994, for example, the company started an aggressive $1 million-plus corporate image TV campaign—followed by trade and consumer print ads—to promote its stable of glossy monthlies. Berlin, Wright & Cameron produced the 60-second spot that broke during the NBA finals. “It will attempt to position Condé Nast as the quality publisher in America,” Florio told Advertising Age. “The whole theme is the quality of our content, and with all the noise about the information superhighway and the technology age, ultimately what it all comes down to is content.”

The company invested in other marketing and distribution solutions, as well. As early as 1990, CNP and Time Distribution Services (TDS) reached an agreement whereby TDS provided retail sales and merchandising services for a number of Condé Nast magazines. In 1992, CNP also collaborated with Spiegel, Inc., the retail giant, to develop automatic subscription renewals, by which a subscription is automatically renewed each year until the subscriber cancels. The process was intended to increase circulation profits by reducing expensive renewal and new-subscriber acquisition costs. Theoretically, it also permitted higher subscription prices by deferring payment to consumers’ credit cards.

In 1995, CNP began propping the market for new products, including its 1996 relaunch of the company’s original title, House & Garden, which would be formally flagged as Condé Nast’s House & Garden. Indeed, the company had already laid the groundwork for continued growth with several impressive magazine acquisitions and launches in the early 1990s. In March 1993, for example, CNP acquired Knapp Communications, which published Architectural Digest and Bon Appétit Architectural Digest boasted sumptuous spreads on the homes of the rich and famous and was the number one magazine in terms of advertising pages in the home-decoration field. Bon Appétifs circulation of 1.2 million placed it in the top ranks of food magazines.

In addition, with its acquisition of the sports-oriented Street & Smith’s subsidiary, in 1995 CNP planned to produce a 610,000-circulation annual aimed at high school basketball players, followed by a similar publication aimed at football players. In January 1994, CNP reacted to the “information highway” hype and bought a 15 percent interest in Wired, the self-anointed “house organ of the digital revolution.” CNP chairman S. I. Newhouse hoped to use Wired as a “media lab” to explore possibilities in new technologies and help evaluate the future of magazines.

The results of that exploration began to manifest themselves in April 1995, when Advance Publications (Condé Nast’s parent) and seven other major newspaper publishers formed a new company to create a national network of local on-line newspapers and periodicals. The new company, New Century Network, would help the member publishers provide local on-line services to their communities. The alliance was yet another step in Condé Nast’s search for technological solutions in the growing information age.

As CNP publications joined the digital age, the legendary Condé Nast culture—of high-brow literati and urbane tea-sippers—was undergoing changes of its own. Despite some fundamental changes in character, CNP maintained its reputation as a “turbulent glamorland of magazines,” according to Paul D. Colford Newsday. Colford went on to describe a “Madison Avenue kingdom where princes and princesses (editors and publishers) come and go at the bidding of the impetuous king (chairman), S. I. (Si) Newhouse Jr.” And Veronique Vienne, writing in the Columbia Journalism Review, added: “It is change for the sake of change. Condé Nast management philosophy mirrors the industry it serves, the world of fashion where the only certainty is the knowledge that the present fad will soon be outmoded.”

Into the 1990s, however, CNP’s game of managerial musical chairs became more serious, as several key directors stepped down from their long-held thrones. At the top of the hierarchy sat Alexander Liberman, who for more than fifty years had been the creative force—as editorial director—behind the entire group of magazines. “Liberman knows how to underplay stylishness for the benefit of style and emphasize immediacy rather than fads,” Vienne noted.

In April 1994, the 81-year-old Liberman was succeeded by 36-year-old James Truman, former editor of Details magazine, giving the media cause for lively speculation. “Painter, sculptor, pragmatist, the Russian-born Liberman was the job. ... Writer, wit, and Brit, now Truman is the job,” quipped the Los Angeles Times. Media consensus was that Truman would help Newhouse appeal to the youth market and carry the magazines—along with new publications—into the information age. Describing his job in the Los Angeles Times, Truman said “it’s kind of like a magazine doctor, but in the broader sense, you know, Alex made it more than that and I would like to make it more than that.”

New, young blood also found its way into the other key CNP post, as Steven T. Florio was named president effective June 1, 1994. Florio—who had served nine years as president and six years as CEO of the New Yorker —succeeded Bernard Leser, 68, a 34-year veteran of CNP and president since 1987. “This is a generational move which is very important for Condé Nast,” Leser stated in Advertising Age. “We’re all in our 60s at the corporate level, so it’s right for us to get a younger man in here.” Florio said he hoped to bring a high energy level and an interest in technology to the company. Approaching the 21st century, CNP remained a company on the move. With a new set of young executives at the helm, the renowned publisher was positioned to take its shifting groups of “class” or specialized readers into the information age.