Conde Nast has always been able to afford the luxury of publishing money-losing magazines, thanks the other half of their parent company—the Newhouse newspaper chain—subsidizing them with cash. Those days are gone. Now, a cable company is all that keeps Conde afloat. And the Newhouse family's getting antsy:
As the economy has fallen apart over the past eighteen months, first gradually then all at once, Condé Nast's biggest problem has been the newspaper empire that Sam created. Last year, the Newhouses' Newark Star-Ledger, one of their biggest papers, may have lost as much as $40 million. No one in the family believes the newspaper business is coming back. The family's cable business, Bright House Networks, with enterprises in several states, still tosses off tens if not hundreds of millions of dollars, keeping the Advance, which houses all of the family's businesses, afloat, and the company is virtually debt-free; the family has always hated to borrow. But resources are now spread thinner. The company no longer has the luxury of pumping cash into a struggling title. "The family needed to save money," Townsend explained to one executive after one magazine closed. Without profit, there's no "distributable cash" for the family. So far this year, Condé Nast is in the red, though the closings and cuts should drive money to the bottom line. The belief around the building is that next year, if the economy recovers, Condé Nast will again turn profitable.
It's been clear for some time that Advance Publications' newspaper profits have dried up. But the reality that a mundane cable company is the last lifeline for all of Conde's glamor is pretty stark. Fishman's article is also the first solid evidence that the Newhouse family's own need for cash could be the driving force behind its newfound reluctance to subsidize money-losing magazines like Portfolio. [Graydon Carter's assertions that this is still a Golden Age for magazine is his least accurate statement since "irony is dead." Also: The New York Times Co. suspended its dividend recently, leaving the Sulzberger family without steady cash flow, as well. Similarities!]
I sat next to Steve Fishman at the National Magazine Awards while he was still working on this story (nice guy!). He spent most of the time peering over the balcony at Si Newhouse and his assorted editors, seated just below us, which turned out to be the scene that closes his article. One silver lining for Anna Wintour, David Remnick, Graydon Carter, and Si himself: after the money and the Conde luxury dries up, the fascination of the media will live on. If that ever disappears, the end is truly near.