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S.I. Newhouse Jr. is cracking down on the use of supplements and special sections that inflate the ad pages of Conde Nast magazines.

Conde Nast Publications also will seek just a 2% increase in ad rates next year as part of an effort to keep its publishers focused on selling full-priced pages rather than relying on less profitable supplements to build volume.

The first casualty of the crackdown is Currency, the one-shot personal finance title that boosted Conde Nast pages last year. Conde Nast had been in discussions with financial media company Bloomberg about a launch of Currency as a regular magazine; Bloomberg confirmed those talks have now been shelved.


"It's been a tough year for the company, and Si wants people to focus on the core business," said one Conde Nast executive who declined to be named. "We have very expensive magazines to put out and that takes real advertising, not faux advertising."

Indeed, after several years of solid growth, Conde Nast hit a rough patch this year, despite continued industry gains. That is in part due to softness in beauty advertising and partly because the company wasn't able to make up for the hundreds of pages Currency added to its 1998 ad count. Through July, 10 of Conde Nast's 17 magazines showed declines in ad pages, according to Publishers Information Bureau. Five posted gains, while two were flat.

Among the hardest hit: Allure, GQ, Mademoiselle, Self and Vanity Fair. Those on the plus side included Architectural Digest, Bride's and Vogue.


But some insiders said titles such as Vogue have become too dependent on special supplements for their success. Vogue, which saw pages jump 14% to 1,467 through July, will publish eight stand-alone ad sections this year.

"They're artificially building volume but deflating profits," said another executive, who also requested anonymity.

This executive added that Mr. Newhouse, chairman of Conde Nast, and President-CEO Steven T. Florio "have asked [publishers] to focus their business more on selling ad pages instead of artificial, low-profit, low-revenue pages. We can't sacrifice profitability for volume."

Mr. Florio confirmed Currency and similar projects are off the table, but denied some titles are too reliant on special ad supplements or that such sections are unprofitable.

Conde Nast is privately held, but profits and margins at the company are said to have grown sharply in recent years under Mr. Florio.


"The corporate onserts that [Exec VP Catherine Viscardi Johnston] was working on are on a back burner. We're going to put a lot of that stuff off," Mr. Florio said. "But individual magazines are being encouraged to keep doing [supplements] where appropriate. It's another tool to build the brands."

Ms. Johnston, the brains behind Currency, continues to oversee such areas as corporate sales, database marketing and research.

Mr. Florio also said he expects a strong second-half showing, which should leave Conde Nast flat or down slightly for 1999.

Conde Nast policy forbids the company's publishers from negotiating rates, a rampant practice in the magazine industry. But rivals have charged the company uses special sections as a way to essentially sell space at a discount.


Even the decision to seek just a 2% rate increase in 2000 is being viewed as a way to cut back on special sections. That's because a larger hike, such as last year's 5% increase, can send more advertisers in search of cheaper alternatives.

"When we've been more aggressive with CPM hikes, we haven't realized it all because people migrate to inserts," the first executive said.

In addition to Vogue, insiders said Conde Nast Traveler, GQ and Glamour also are heavy users of special sections.

Vogue Publisher Richard Beckman said all the advertisers in his magazine's supplements increased their in-book schedules as part of the deals. "We use them to build our business, not to cannibalize it," he said. "It's very profitable, very smart and gives clients extra value."

Mr. Beckman, who was in a room with GQ Publisher Tom Florio during a phone interview, laughed when asked if there has been a corporate crackdown on special

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