Conde Nast's Townsend on Why Gourmet Was Shut Down
NEW YORK (AdAge.com) -- Not long after Conde Nast shut down Gourmet, Cookie and two wedding magazines on today, we asked its president-CEO, Charles H. Townsend, how much of a role visiting McKinsey consultants played, whether this decision means the company is veering from elite magazines toward mass titles, what's happened to magazine launches this decade -- and when this whole McKinsey process will finally finish.
Here's our interview, lightly edited.
Advertising Age: How important was McKinsey in the decision to close these four magazines?
Mr. Townsend: This was our own process. McKinsey is working on our ongoing businesses to provide us with templates to improve their financial health. But I wouldn't have them spend a great deal of time on businesses to be discontinued. We made these decisions based on our assessments of the financial health and the viability of one title vs. another.
In the epicurean situation the sentimental favorite might be Gourmet, but the big-business 800-pound gorilla is Bon Appetit. The same with Brides: Taking it to 12 times from six times [while closing Elegant Bride and Modern Bride] is how you practice that big business.
Advertising Age: McKinsey's been looking at Conde for months, though; When did you know today's shut-down titles were businesses to be discontinued?
Mr. Townsend: We made the decision late last week. They looked at all of our businesses. They focused on the list of businesses with us that we believe have very strong bright and vibrant futures.
Advertising Age: So did McKinsey's focus on other businesses inform your decision to close these?
Mr. Townsend: It was somewhat confirmation of the obvious. They know this company very, very well. They know how sentimental we are, how reticent we are to discontinue businesses like Gourmet. But they certainly didn't twist our arms. They simply confirmed, unfortunately, the obvious.
Advertising Age: Is it correct to infer Gourmet was losing money?
Mr. Townsend: It was operating as a burden. In the middle of this decade it was a profitable business, but having two of those businesses did not help the situation. And the dominant business -- particularly with the consumer -- is Bon Appetit, which emerged as the considerably stronger business.
Advertising Age: A Conde Nast employee asked me today whether choosing Gourmet over Bon Appetit signals the future of Conde Nast. Do you shut down the title that's beautiful and smart with good writing, the employee asked, and go for the title with recipes and pictures of cheeseburgers? Do you go with mass over the esteemed, narrower title?
Mr. Townsend: That's not Conde Nast. I think that Bon Appetit certainly has broader appeal but I would by no means characterize it as a mass magazine. It's still a high-end magazine. You look at its demography, its price points, the advertising it carries, you look at everything about it, it's a Conde Nast magazine.
So the answer to that query is no, that's wrong. We are content with this company's position relatively to the other big players. We're not abandoning our position at all.
Advertising Age: Are there any more shutdowns to come?
Mr. Townsend: No, zero.
Advertising Age: Is the McKinsey process complete at Conde Nast, and if not, what's still coming?
Mr. Townsend: We're waiting for the response from the individual titles.
McKinsey is going to look over our shoulder as we sort out the plans that are presented to us that have had the opportunity to deal with the menu of suggested financial controls, expense controls.
I would say that we're done in a couple of weeks, with the 2010 budgets. Their support of this process has invaluable.
Advertising Age: There were recent years in which Conde introduced lots of new titles: Lucky in 2000, Cargo in 2004, Domino and Cookie in 2005, Men's Vogue in 2006 and Conde Nast Portfolio in 2007. Of those launches, now only Lucky survives. Have conditions for big magazine launches changed?
Mr. Townsend: The conditions changed for almost limitless investment in supporting launches in the period 2004, 2005, 2006 and 2007. And they're facing a very, very challenging market in 2008, 2009 and 2010.
Absolutely the conditions are diametrically changed. If titles aren't well-established, haven't qualified as a core book, they're under huge pressure.
Ad Age: Are those changes recessionary or something more lasting?
Mr. Townsend: I believe it's recessionary. Unlike previous recessions this is a very, very long-duration, slow-to-recover economic cycle. It makes investment properties very challenging to support.
Advertising Age: But big launches will be easier again after the recession?
Mr. Townsend: Well let's hope. I have no more vision than anybody I've read.