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Si Newhouse’s Dream Factory

Graydon Carter in his office.   

“Why do you do what you do?” pursued Florio.

“Ghosts,” he said. “You wouldn’t understand.”

When in 2003 Florio faltered after heart trouble, Newhouse called him at home, where he was convalescing over the holidays. Sales were off, and Florio wasn’t on top of the operation.

“You think it was a surprise to Steve Florio that he was fired?” says Galotti, whom Newhouse fired twice. “Absolutely not … Anybody who works for him knows that when his day is up, Newhouse will just do it. You know that one day, your ass is going to get it just like anybody else’s.”

Newhouse could fire with brutal swiftness and seeming indifference. “Si doesn’t do reverie or procrastination. He’s not romantic. He’s pragmatic,” says one person close to him. Publishers in particular are utilitarian, interchangeable as cards in a deck. “Si’s not cruel,” says a former executive. “It’s as if, after he’s made up his mind, he moves on. In Si’s mind, the person is already gone. Firing is an afterthought.” Following his demotion, Florio got a new title and office, but was no longer a player. He died in 2007 of heart problems.

Most executives get sent off with a fat check, which eases the pain. Still, many of the exiled are at a loss, having missed a central fact of Condé Nast: The lifestyle is on loan. “A kept luxury lady” is what Tina Brown told me she felt like.

The irony of this moment in publishing history, when the future seems so uncertain, is that Newhouse’s company has always looked years ahead, to the next big thing. Historically, Condé Nast’s profits have not often exceeded 5 percent of revenue, the reason being that the company was constantly sinking money into new magazines. The domestic magazines have under $2 billion in revenue. “The company could have earned another $50 million in profit a year,” says one source familiar with the financials. “But Si’s belief was the company constantly needed to be growing.”

Newhouse greenlit a magazine a year for the last dozen years, including Lucky in 2000 and Domino, another $100 million project, in 2005. Portfolio was a more ambitious project, a Vanity Fair for business and an essential market expansion for a company dependent on fashion advertisers. “It was a great idea for a magazine,” says Carter, before pointing out that Condé Nast already has a Vanity Fair for business … Vanity Fair. The magazine was an enormous gut-level bet, made with a kind of CEO’s heroic boldness, and from the day it was announced, it had a certain sprawling, uncontrollable Heaven’s Gate quality.

“It’s still a golden age of magazines,” says Graydon Carter.

Even as some questioned the reasonableness of Newhouse’s passion for Portfolio, in other ways the company was growing more orderly, less spendthrift, more like other companies. In 2004, he replaced Florio with Chuck Townsend, making him CEO and president. Townsend, 65, is the un-Florio, a toned, workout guy and past commodore of the New York Yacht Club—his office is decorated with photos of sailboats. “He looks like a CEO,” says Carter, who’d tired of the killers. “He’s clubbable.” Townsend is an operations guy, not an instinctive boat rocker, which is the knock on him. One former executive who worked closely with him says, “Most people care about making an impact. I’ve never seen Chuck push if a Newhouse doesn’t want to do something.” He went to work on the org chart, streamlining an unwieldy corporate structure. “Every year since I joined, the company got more and more fiscally responsible and focused,” says one former executive.

Now, instead of Mad Dog, publishers like the unflappably personable David Carey represent the culture. Carey, a suburbanite and enthusiastic corporate citizen, presided over The New Yorker as it climbed into the black in 2002, and he is widely praised as “a strategic thinker”—a pointed, if implied, critique of the Florio cult of personality. Newhouse tapped him for the company’s most prominent task, to publish Portfolio. “I like jobs that are hard and complex,” says Carey, who rarely speaks an out-of-line word.

Truman was another mid-decade departure. He’d relaunched Details (where I worked for him) in 1990 and became, at 35, the second editorial director in Condé Nast’s history. With impeccable taste and quirky pop-cultural enthusiasms, all packaged in “profoundly expensive” suits, as he once quipped, he was a slightly foppish Si-whisperer in the Liberman tradition.

Over ten years, Truman seemed to grow restless, even with his successes—Lucky, which was his idea, was more catalogue than magazine. “I told Si a couple of times about how bored I was with managing, and he said, ‘That’s the price you pay for being at the top of the company. I struggle with that, too.’ ”