After all of the slightly hysterical coverage of Condé Nast’s decision to bring in consulting firm McKinsey & Co., we decided to call around to see what we could expect. Certainly, if past experiences are any indicator, the fundamental nature of the brand will be affected. The last time McKinsey was hired (yes, they’ve been there before), chairman Si Newhouse and the company leadership followed their advice closely, eliminating jobs and cutting a lot of overhead. As reported in New York recently by Steve Fishman, this resulted in a period where big-personality publishers like Richard Beckman and Ron Galotti left the publishing company and were replaced by more modest, disciplined businessmen like CEO Chuck Townsend. This time around, according to a source close to the company, glamorous editors like Anna Wintour and Graydon Carter are going to see their way of doing business become a lot more sober.
“It’ll be a real wake-up call,” says our source. “A lot of what they’ve come to expect in terms of car services, and fruit on your desk will be gone.” There will be jobs eliminated, yes, and “some massive cost cuts.” The source continued, “I don’t think any part of that company is going to be immune,” even though they’ve already been good about cutting costs. “In the last couple of years, under Chuck Townsend, they’ve been a lot more disciplined, they’re now looking at a lot more fundamental things.”
When the memo that McKinsey was being brought aboard went around on Monday, it was a surprise to most staffers. While someone like Vanity Fair’s Graydon Carter surely got a heads-up in advance, he was probably still surprised that the step was being taken. He recently told Fishman that he tried to bring up money with Newhouse and was rebuffed. “I had some ways of cutting expenses around photo shoots. He just didn’t want to hear it. He got all uncomfortable,” Carter explained. “Si said, ‘Just make sure there’s nothing that can hurt the magazine.’ In my lunches with Si, you wouldn’t know that there’s anything different from 2002, 1996, 1992.”
Title closings will likely not be a focus of McKinsey’s report — largely because the magazines that were on the chopping block, like Domino, Men’s Vogue, and Portfolio, have already been chopped. The primary method of cost saving, according to our source, will indeed be job cuts. They’ve had a pretty terrible summer, but it’s not as though Condé Nast is the only company in this situation. Time, Inc. hired McKinsey in 2007. The results there included hundreds of jobs eliminated but also an efficient reorganization of how the titles are grouped and work together.
Related: Read Fishman’s profile of the Condé chairman, “Si Newhouse’s Dream Factory“, from May.