Why Conde's Cocktail of Sex Appeal, Biz News Failed

Insiders Blame Portfolio's Ill-Timed Focus on Luxury, Lack of Editorial Vision

By Published on . 6

NEW YORK (AdAge.com) -- Condé Nast Portfolio proved in the end, as some suspected from the beginning, to be an unfortunately timed overreach for the Condé Nast brand of high-polish, high-cost publishing.

Portfolio promised business coverage that was "smart, substantive, with some sex appeal," as Editor in Chief Joanne Lipman put it once more last week, three days after Condé Nast gave up on the magazine and its website.

LOSS OF GLOSS: The upscale title struggled with soft ad sales after the economy tanked early into its short life.
LOSS OF GLOSS: The upscale title struggled with soft ad sales after the economy tanked early into its short life.
That was the mantra from the moment in sunny August 2005 when Si Newhouse Jr., chairman of Condé parent Advance Publications, named Ms. Lipman to edit and David Carey to publish a new business monthly. Business was good enough that Condé threw the launch long -- its first big mistake. By the time the first issue appeared in April 2007, after nearly two years of expensive hiring, planning and promotion, sexy wasn't what sexy used to be.

The long-gestating debut delivered a diamond-company CEO posing in a strapless, emerald-silk-chiffon gown, accompanied by fashion credits; a high-profile Tom Wolfe blowout on "The New Masters of the Universe" and "A Tiger Woods IPO?" by Michael Lewis. Then Portfolio took a four-month break before going monthly ... into the teeth of a very unglamorous recession.

Ad sales softened, a stripped-down Ruby on Rails aesthetic rose and slow-moving ships of state were spotted struggling to steer. Ad spending stalled, then plunged, in the five categories that composed 80% of Portfolio's business. "Financial services fell first, then B2B, automotive, business travel at the end of last year and then, this year, luxury," Mr. Carey said in a postmortem interview.

Tip of the iceberg
The recession certainly wiped out plenty of other magazines, including Condé's other recent launch, Domino. But some people involved with the magazine said ad sales weren't the whole problem.

Plenty of Ms. Lipman's hires wound up questioning her lead. She told potential hires that "'Everything can be a business story,'" said Jeffrey Chu, senior associate editor at Portfolio from early 2007 through last August. But his experience, once he was hired, was different. "In meetings with Joanne, everything could be a business story, but it had to be about rich people, hedge funds or finance," he said. "It was about rich people's toys. It was about dressing a diamond-mining executive up in a fancy dress and making people look glamorous, but from worlds that kind of already were famous."

"I'm a believer that it could have worked," said Mr. Chu, who left to be a senior editor at Fast Company. "I am one of many that wishes Si had given another editor a chance."

Ms. Lipman defended her editorial and management decisions. "We pushed people outside their comfort zone to create something new," she said. "I have an extremely high bar. Not everyone is comfortable with that."

Mr. Carey said editorial was never the problem. "While Portfolio perhaps did not win over what I refer to as the 'snarkanistas,' it very much did with its readership," he said after the shutdown. "We have received hundreds and hundreds of e-mails this week from CEOs, CMOs and others about how much they enjoyed the publication, its point of differentiation, and how much they looked forward to reading it."

But replacing top editors hasn't been Condé's way in a while either. It dismisses or switches publishers several times a year -- but hasn't dislodged a continuing magazine's editor since it gave Gail Zweigenthal's job atop Gourmet to Ruth Reichl in 1999.

Intentionally counterintuitive
Then as the world economy crashed in real time last fall, and Hank Paulson became the only person who mattered, Portfolio's November 2008 issue featured a cover photo of American Apparel's Dov Charney. "Sex, T-shirts, and illegal workers," the cover line read. "C.E.O. Dov Charney says they're good for business. Are you buying?" A cover line farther down teased the financial panic enveloping the globe. For some it was like an October 2001 cover package on that summer's shark panic.

Ms. Lipman said she meant for Portfolio to be counterintuitive. "If it was conventional wisdom, we didn't need to say it," she said. "You already knew it. We found there was a huge appetite, particularly during the financial crisis."

Portfolio did earn editorial recognition from other quarters, too, winning a National Magazine Award for its "Briefs" section last year and getting nominated for three Loeb Awards for business and financial journalism.

And readers came indeed. Portfolio averaged 335,612 paid subscribers in the second half of 2008, up 43% from the first half. Newsstand slipped 11% at the same time, but Condé attributed that to casual readers becoming subscribers.

All the same, Portfolio first neared death around that time. To save it, and hopefully get it through 2009, Condé made layoffs, trimmed its frequency to 10 times a year from 12 and, in a very Condé move, took an ax to the website, which many considered the most promising part of the operation. Last November, Portfolio attracted 1.7 million unique visitors, according to Compete. By March visitors had fallen to 957,485.

Lavish perks, cheap magazine
Condé lost a massive, although undisclosed, sum on its attempt to launch Portfolio. The original plan provided for spending $100 million over five years. Spending was lavish in the Condé way; highly paid editors frequently lunched with each other on the company's dime at pricey New York restaurants such as Esca and Daniel Boulud's DB Bistro Moderne. The staff numbered 140 at its peak and still counted about 85 last week. Meanwhile, Portfolio charged subscribers just $12 for 12 issue subscriptions, a low price that made ad revenue all the more important.

Portfolio's ad pages from January 2009 through the April 2009 issue fell 61% from the same period a year earlier, which included one more issue, according to the Media Industry Newsletter. Most magazines suffered but not nearly that much; ad pages for monthlies fell 22% from January through April. According to Publishers Information Bureau data, the title's revenue (calculated by multiplying number of pages by the one-time open rate) totaled $35 million in 2008 and $29 million in 2007. (Of course, that doesn't include any ad pages that were given a frequency discount, or were sold in across multiple titles.)

American City Business Journals, a Condé Nast sibling within Advance, expressed interest in taking over Portfolio.com if the magazine left print, several people said last week, but nothing came of it. One person said American City Business Journals had renewed its interest since the shutdown last Monday, although the odds of a deal there still looked slim. The company did not respond to a message seeking comment.

The industry probably won't try again to take 600 days polishing and promoting a new title, said George Janson, managing partner and director of print communications at Mediaedge:cia, and someone who regretted Portfolio's passing.  "I don't know that we're going to see a launch that's two years in the making again," Mr. Janson said. "I think the launches will be quicker to market and quicker to pull the plug."

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