New Conde leader faces sluggish sales

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Charles H. Townsend, appointed last week as president-CEO of Conde Nast Publications, is already worried about his newest-and, many would say, most crucial-responsibility: ad sales.

"I'm very focused on the first quarter, and very concerned about it. It's not off to a strong start," he said in an interview, citing advertiser apathy and hesitancy to make commitments as primary reasons for a lackluster showing so far. "If you get three or four issues with a slow start, you soon run out of year to make it up in for a monthly magazine ... two more issues past that and you're at the point of no return for saving the year."

Mr. Townsend takes over from Steven T. Florio-who stepped aside last week after 10 years as president-CEO, citing the need for a lifestyle change-after a particularly strong 2003 ad sales performance. Pages are up 5.2% for the period January through November, according to TNS Media Intelligence/CMR's Group Publishers Report. Conde Nast was second to Time Inc., which has considerably more titles and racked up 42,409 ad pages to Conde Nast's 25,078. It's ahead of rival Hearst Magazines by about 10,000 pages.

But that momentum has not carried into the first quarter. "The wind went out of sales in late November and early December," said Mr. Townsend, who presides over his first Conde Nast publishers meeting in Key Largo, Fla., this week. He said his chief concern will be to "get a good fix on the second quarter and see what support people need to make it a strong one."

Support is something Mr. Townsend, 59, is known for within the halls of 4 Times Square. Publishers cite him as the go-to guy on issues such as updating technology systems. He's spent the last two years as chief operating officer of the Advance Magazine Group, which encompasses Conde Nast, Fairchild Publications, Golf Digest Companies and Parade Publications, and was instrumental in forming the business structure that allowed the back offices of those groups to consolidate into the Shared Services Center, recently moved to Wilmington, Del., at a considerable cost savings.

Mr. Townsend will keep his duties at AMG, which include overseeing circulation, finance, manufacturing and technology. One of his first moves was to name John Bellando as Conde Nast's exec VP-chief operating officer, also staying as chief financial officer of AMG. That will free up Mr. Townsend to turn attention to Conde Nast's advertising sales and corporate marketing, the primary concern of his predecessor, Mr. Florio, 54, who becomes AMG vice chairman.

"When I found out about Steve's decision, I moved very quickly and without hesitation and asked Chuck to take the job," said S.I. Newhouse Jr. chairman of Conde Nast. "He's a brilliant executive who's well-versed in all aspects of publishing. He has a sensitivity about the excellence of what we do, and that edit comes before the business side, but he also has great business-side skills."

Overseeing Conde Nast ad sales means keeping track of 18 publishers selling titles as diverse as weekly The New Yorker and monthlies Vogue, Architectural Digest, Bon Appetit, GQ, Lucky and soon-to-launch men's shopping title Cargo. But most publishers see the transition to Mr. Townsend from Mr. Florio as seamless. "He already knows everything about my business," one publisher said. "He'll hit the ground sprinting," said another.

Many also cite his deep roots with the company as evidence of his being completely ingrained in the culture of Conde Nast. He joined in 1994 as publisher of Glamour and moved through corporate roles that include the acquisitions of Golf Digest Cos. from the New York Times Co. and Modern Bride from Primedia to form the Conde Nast Bridal Group.

"To fiddle with the culture is a very risky business and we don't need to do that to be good at what we do," Mr. Townsend said. He describes it as a "movie-studio environment. We have stars. We run a circus. We have a cafeteria that is a living piece of art. We have the most interesting owners and very disciplined business people."

strong culture

"The culture is so strong that it goes without saying that this is the first consideration of the CEOs we've had," Mr. Newhouse said. "It affects our acquisitions, our startups and our budgeting."

While it seems Mr. Townsend's appointment means other potential heirs were overlooked it could bode well for certain up-and-coming Conde Nast executives-such as Fairchild Publications President Mary Berner, Golf Digest Cos. President Mitch Fox, and New Yorker's Mr. Carey-given the likelihood the job will become available again in the not too distant future.

Both Mr. Townsend and Mr. Newhouse said the company's growth is likely to come from launches, but they'd like to do more acquisitions as well. Mr. Townsend said AMG was established so the company could easily absorb or launch new ventures. "We now have a business platform that can support twice as many titles as we have with very little increase to our overhead," he said. Mr. Townsend is most interested in the men's-enthusiast field, and cited Teen Vogue as a recent line extension that has the potential to grow into a new group.

All in all, it appears that Conde Nast is on the brink of a new era. "I invented this job, and how I did it was very different than my predecessor," Mr. Florio said. "Chuck will make it different for him, and will probably approach it in a much more administrative way."

"We've now become a company that has embraced just enough discipline not to lose our savoir faire," Mr. Townsend said. "But we now also have free cash flow and not just publicity."

contributing: scott donaton

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