Condé’s Townsend: The Old Days of Magazine Publishing Are Over
Print can thrive, but only as part of broader content initiatives.
The notion that print is dying is “naive,” Condé Nast CEO Charles Townsend told an audience Friday at the Paley Center for Media in New York City, though the executive stopped short of saying that print could survive on its own as a standalone entity.
“The sensibility that print is cratering is just nuts,” Townsend said. “There’s nothing in the way of growing these businesses, but you can’t do it without a really substantial digital presence. It’s really managing a brand as opposed to a magazine.”
During a question and answer panel with Glamour editor-in-chief Cindi Leive at the Paley Center’s Media Council, which serves as a forum for dialogue on major issues facing the world’s media industries, Townsend discussed the future of magazine media in the digital space with an often optimistic forecast.
Prior to the recession, Townsend said “the print business was absolutely on fire.” He added that companies like Condé Nast were showing between 12 to 15 percent topline growth in print, but noted that changing market pressures, as the industry frequently hears, has led to a shift in the way magazine publishers do business.
“Then you get to the moment of the recession, the deep recession, and what did we all do? We lost 40 percent of our topline revenue [and] that was an incredibly painful experience, but we pulled out hundreds of millions of dollars in costs,” he said. “In terms of margin management, we came through the recession in an incredibly healthy position. Post recession is all about digital, but not at the expense of print as the pre-recessionary sensibility was.”
Townsend said Condé Nast has emerged from the recession “lean, trim and ready to play,” and that in 2010 and 2011 the company experienced topline expansion of 5 to 7 percent for its print business, with Web assets growing between 32 to 33 percent.
“The post recessionary moment is really the introduction of alternative platforms that takes the pressure off of the print business, but doesn’t replace the print business,” he said. “Our print business continues to grow post-recession, but this year is a miserable year. Not because of Condé Nast or any other media company, but because of the anemic U.S. economy—nobody can escape the problems the U.S. economy imposes on us.”
Townsend said Condé Nast’s Web business has grown at half the rate expected so far this year, by about 15 percent topline growth, and print has also been trending upward despite the current fiscal climate.
“Even in this worst moment that any of us can remember with the U.S. economy, the print business continues to grow and the margins are sharper—the growth profit margins are mouth watering,” he said. However, he added, with “net margins, we try to run at 10 percent [but] we’re going to fall short of that on the print side, but we are still an expanding business. When this economy recovers, and it must for all of us, the print business is going to be on fire.”
The print business model will now be complimented by a variety of assets, said Townsend, including, digital and mobile, among others. In November, the company will also announce that it is increasing rate-bases for several of its titles due to growing digital tablet circulation, which Townsend estimated to be around 1 million, or close to 10 percent of total circulation.
“Heretofore it’s been an add-on—now it’s an intrinsic part of our rate-base,” he said. “We characterize ourselves a media company and not as a magazine publisher.”
When asked by Leive what the industry could have done differently over the last several years, Townsend pointed to pricing models and content distribution as a large mistake that magazine publishers made.
“This industry suffers from giving its content away—why did we ever give subscription circulation away for a buck a month?” he said. “We created a habit that has almost been impossible to break. Now with bundling we can [provide] digital content, archival content, e-books, e-access to events, mobile content and print—now we have a chance to play ball with consumers on the basis that most every other segment of the entertainment industry has figured out how to do.”
Mobile will be “a big piece of our future,” said Townsend, that is driven by the demand of the customer and not that of advertising interest or that of the company’s. While this area is promising, it is not without difficulty—Townsend estimates that in print and on the tablet there is an $87 CPM range, and an $8.50 CPM on the Web.