You might think Conde Nast, where ad pages have been publishers' chief currency for decades, would be overjoyed. Until the scenario was pointed out to President-CEO Charles H. Townsend, however, it never crossed his mind. "It's an interesting statistic if true and of itself a source of pride," he said. "But it's very difficult to monetize those bragging rights."
A different Conde Nast
Welcome to the bigger, cooler, more practical Conde Nast. Mr. Townsend has only occupied the top job under billionaire chairman Samuel I. "Si" Newhouse Jr. since February 2004, when he succeeded the legendary and flamboyant Steven T. Florio, but he's had enough time to quietly shift the company's culture to reflect his own more collected management style.
It was not a surprise, for example, that he fired Vanity Fair Publisher Alan Katz last month; the shock was that it happened four deliberate months after rumors of an ouster started seeping from a company that once cut loose publishers on a dime.
"I waited longer than some might have," said Mr. Townsend, 62, during an interview in his 11th-floor office at 4 Times Square. "The former Conde Nast was a very emotionally charged environment. We did a lot of emotionally charged things here and made rather quick, abrupt changes.
"I want people to see that when I tell them that I'm putting them in a new assignment that I'm going to give them the opportunity to make it work. I want them to believe that and not say, 'If I have two down issues, I'm dead meat."'
"Steve ran it like a high school," one publisher said of the old days. "The cool kids, the not-cool kids, the favorites. Decisions were made based on, I don't know, his preference. For Chuck it's about the performance."
Both men are "amazing executives," said Beth Fidoten, senior VP-director of print services at Initiative. "As a buying observer, I would say that it's now less a cult of personality."
Links in the chain
Some call comparisons unfair, partly because the true power has always belonged to Mr. Newhouse, now 78 years old and also chairman-CEO at Conde's parent, Advance Publications. They point out that the divergent Florio and Townsend regimes are before-and-after reflections of a media business wracked by accelerating change.
Selling ad pages, for instance, once depended on three-martini lunches at the Four Seasons, not 360-degree programs across media platforms. Print publishers battled their chief rival, TV, in a cold war that at least boasted a certain stability. And until the post-bubble web recently got its groove back, print all but owned narrowcasting to coveted niche audiences.
"It was a time when you could swing for the fences and that's what everyone wanted to see," said a senior Conde executive. "Steve was the pirate captain. It's a different time today; it's a time when you have to be far more strategic about everything you do. The marketplace is as turbulent as you can imagine. Having someone like Chuck at the helm feels very good-a calm, steady hand."
Mr. Newhouse himself sees Messrs. Townsend and Florio as part of a long chain of chief executives who each linked his predecessor to his successor. "There has been a succession of CEOs since time immemorial," he told Advertising Age. "In each case the company has been different, with different numbers of titles. They've all performed well and been appropriate for the kind of company that we were at each stage of our existence."
And however much Mr. Townsend appears the rational actor after Mr. Florio's bravura, it was Mr. Florio who instituted budgets and regular publisher meetings.
Vice Commodore Townsend
Born in Philadelphia Hospital but raised on the Chesapeake Bay in Queenstown, Md., Mr. Townsend grew up with a love of the water. He is now a competitive sailor, racing at events up and down the East Coast, as well as vice commodore at the New York Yacht Club.
He actually often sees Mr. Florio -- a friend to this day -- on trips to Florida, where he has a house in Ocean Reef, or other coastal areas. "We vacation frequently in the same spots," Mr. Townsend said. "We love our homes in Florida that are not too far from one another. We're both on the water quite a bit, so we'll end up in Martha's Vineyard together."
He spent 10 years at Hearst Corp. before joining The New York Times Co. Magazine Group as publisher at Family Circle in 1986; before long he was CEO of the magazine group's women's publishing division.
He joined Conde Nast as Glamour's publisher in 1994, and was named the company's chief operating officer in January 2000. While Mr. Florio was out selling ad pages, Mr. Townsend went to work in dusty but important areas such as human resources and information technology.
Richard D. Beckman, a 20-year company hand who is now president of the Conde Nast Media Group, says Conde's expansion requires the more analytical, operational leadership that Mr. Townsend brings.
Two disciplines merge
"We've evolved from a very swashbuckling sort of an organization to an organization that by necessity of its scale has to be managed with the left side and the right side more in cohesion," Mr. Beckman said. "And that's a very interesting challenge, because when you bring the disciplines of an investment bank to the creativity of a Broadway show, those two things don't necessarily exist seamlessly.
"But you know," he added, "touch wood, so far it seems to be moving quite nicely in that direction."
Advance Publications bought Fairchild Publications in 1999 for $650 million and the Golf Digest Cos. in 2001 for $350 million. Though they originally remained independent of Conde in most ways, many back-office operations were combined.
When Mr. Townsend took over, Conde Nast published 15 magazines, excluding the then-independent Fairchild and golf titles. It had just closed out 2003 with 27,400 ad pages sold, second in the industry to Time Inc.'s 44,907, according to tallies by Media Industry Newsletter based on Publishers Information Bureau figures.
Last fall, Messrs. Newhouse and Townsend merged Fairchild and the Golf Digest Cos. into Conde Nast. There have been launches such as Cookie, originally a Fairchild title, and Domino, the home-style mag. The company has also accelerated online efforts in the last two years, notably introducing Men.style.com in January 2005.
Ad page leaders
Today the company publishes 28 titles -- 29 if you count the Your Prom annual -- and moved 36,625 ad pages in 2005. Time Inc., the champ, sold 46,604. (If Time Inc. had sold those 18 titles already, its ad-page count would have been 32,771, although it would still have led by revenue.)
More is coming. CondeNet, the company's digital division, is experimenting with a user-directed news site at Lipstick.com and plans to introduce a website for teen girls -- probably to be called Flip -- this winter. Next spring brings another magazine entry, the highly expensive, long-prepared and very risky Conde Nast Portfolio.
When Mr. Townsend sat down with Advertising Age, he had just emerged from a publishers meeting at which, he said with a smile, the web was not discussed much for once.
Digital consumes incredible time and resources, he explained, even though the web contributes just 1% of Conde Nast revenue. Each title, for example, got budget authorization to hire a web editor this year. "I have no choice but to be very involved in this company's migration to a position of complementary media, multichannel media," he said.
That doesn't mean Mr. Townsend will burn dollar bills just to fuel a big digital enterprise. "You can dive in up to your ears on the expense side-content and people and technology and applications development and acquisitions," he said, "but you're not going to change the equation substantially.
"You've got to make the big machine go, which is really the magazine company. Vanityfair.com is no more a replacement for Vanity Fair than the man in the moon."
To that effect, building is fun. The CEO said new businesses are the most exciting part of his job. In addition to green-lighting Portfolio, he is nurturing Men's Vogue and will bring out one special issue of Vogue Living in November and another in 2007.
Private and picky
"We have the privilege as a private company to invest an inordinate amount of our free cash flow back in new-magazine development, so that continues along," Mr. Townsend said. "We're poised to participate in opportunistic acquisitions." But here Conde can be picky. It didn't look at Dennis Publishing's Maxim, Blender and Stuff when they were for sale earlier this year because they didn't fit the culture. The company also is unlikely to go after any of the relatively small mags just offered up by Time Inc. so it can concentrate on bigger priorities.
An unpleasant fact at the bigger Conde Nast is that it needs to add $150 million in revenue each year just to keep pace with rising costs.
Like the CEO before him, Mr. Townsend must decide whether to shut down titles and put people out of work. When he closed Cargo last spring, he said the gut-wrenching thing wasn't so much losing the magazine or the mark; it was sitting down in front of 30 or 40 people and explaining their hard work had failed.
But Mr. Townsend said he is happy with The New Yorker, even though ad pages are off 19.7% through August, according to the Publishers Information Bureau, and is serious about the revival at Jane, where ad pages are down 34.5% through August and which he sees as targeting a rare gap in Conde's audience -- women in their early and mid-20s.
'Breathtaking' profit growth
In fact, Mr. Townsend believes the empire he surveys looks good. "Our profit growth is breathtaking year after year," he said. "Our revenue growth is averaging more than 10%, and we're a big company, a multibillion-dollar company. All of the naysayers, I don't know what to Christ they're looking at, but they're not looking at my business."
Of course, one day Mr. Townsend will seem in retrospect like the bridge between Mr. Florio and Mr. Townsend's eventual successor.
"Where they needed me was to build top-line revenue," Mr. Florio said last week. "What Chuck has done has not only encouraged the publishers to continue to build top-line revenue but probably to spend more time looking at bottom-line profitability. But I think we needed to build critical mass first.
"The guy that comes after him, he'll grow it some more, because it's Conde Nast."