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Publishing giant Condé Nast is set to undergo a significant restructuring.
In a memo to employees Wednesday, CEO Roger Lynch said the company will cut about 5 percent of its workforce in the coming months as it seeks to adapt to a rapidly changing media environment. With more than 5,000 employees, the total number of cuts will be in the hundreds.
“As many of you have heard me say before, we are in an industry that is changing,” Lynch wrote in the memo. “Our audiences are changing, technology is changing, and what advertisers want from us is changing. With all of this change surrounding us, the only certain mistake is to not change ourselves.”
To that end, the company is closing open job postings, rethinking some long-term projects and looking to reduce its real estate footprint, in addition to the staff cuts. Condé titles include Vogue, Vanity Fair, The New Yorker and Wired.
That being said, Lynch also noted that Condé Nast is in “what we expect will be our third straight year of overall revenue growth,” citing rapid expansion in ecommerce and digital subscription starts that have “more than doubled” since last year.
However, the challenges facing the rest of the media are also impacting Condé, from the rise of artificial intelligence and changing search habits to a video environment that is shifting toward shortform content.
“This year in particular, video has been a volatile area of the industry as audiences move to places like TikTok and YouTube Shorts,” Lynch wrote, adding that “these new video formats haven’t found monetization models yet.”
Last month, the company announced that Agnes Chu, the head of Condé Nast Entertainment, would leave the company in a larger video restructuring. The changes will see the individual brands in the company portfolio oversee their digital video content, though the team that manages Condé’s longer-form TV and film content is still intact, and reports directly to Lynch.
The family that owns Condé Nast, the Newhouse family (through their holding company Advance), has found itself in the middle of the changing media landscape. In addition to owning the publisher, they are the largest outside shareholders in Warner Bros. Discovery, which has been trying to adapt to the current moment as well, and are also major investors in Charter Communications, which is seeking to transform how the TV bundle is sold through its deal with Disney in September.
Read Lynch’s memo to staff below.
Dear all,
I’m writing to share an additional update about our business with details about planned changes to how we operate.
As you know, we began this work a few years ago during our global transformation. Our new strategy brought teams together for the first time around the world, while also creating new, diverse revenue streams. The result of this successful strategy and work is leading us to what we expect will be our third straight year of overall revenue growth. A highlight has been the promising results from our consumer revenue teams, which are delivering growth in a way that didn’t exist four years ago. With the investments we have made in our consumer strategy, we have more than doubled digital subscription starts this year. E-commerce is also proving to be an important growth engine, up 44% this year on top of the very solid growth we saw in 2022.
Over the next many weeks our teams will be working to finalize our 2024 plans. The approach outlined below reflects our path to protect and expand our journalism and our creative editorial work.
Remaining Competitive in a Changing Digital Landscape – A few weeks ago we shared our plan for changes to our content and video teams. Some of these changes are a direct result of how the digital video landscape is shifting. This year in particular, video has been a volatile area of the industry as audiences move to places like TikTok and YouTube Shorts (up 600% over the last two years alone). Social video has helped drive overall video audience growth (we expect to exceed 20B video views this year, significantly beating our target); however, these new video formats haven’t found monetization models yet. Beyond video, Meta (Facebook and Instagram) has deprioritized publisher content in users’ feeds, which has caused all publishers to experience significant declines in referral traffic.
Creating One Content Team – As we shared a few weeks ago, we have begun restructuring our top-line leadership teams across editorial content, audience development and video to solidify their place at the center and heart of the company. We pride ourselves on being one of the most prolific and premium creative organizations worldwide, and we remain steadfast in our commitment to ongoing excellence. Creating a more efficient combined content organization will enable us to continue to invest in our great journalism.
Investing in Areas We Can Control – While we can’t control platform algorithms or how AI may change search traffic, we believe our long-term success will be determined by growing the many areas that we can control, including subscriptions and E-commerce, where we directly own the relationship with our audiences. In fact, over the next five years we plan to double consumer revenue. This complements the planned organic audience growth that is monetized by our best-in-class commercial revenue team with industry-leading CPMs (ad prices). In part because of our commercial team’s capabilities, especially with digital product monetization, we are also planning new expansion of our brands within our existing owned and operated markets.
2024 Budgeting – As many of you have heard me say before, we are in an industry that is changing. Our audiences are changing, technology is changing, and what advertisers want from us is changing. With all of this change surrounding us, the only certain mistake is to not change ourselves. Over the next several months we will be taking additional steps to find efficiencies and reduce costs from the business so that we can continue to invest in strategic growth areas and continue to support the editorial core of our business, as outlined above. We are prioritizing cost reductions through real estate/office space savings (for example, we are already in the process of bringing our teams in the UK together in one space), closing open roles and re-phasing certain long-term projects across the business.
However, these efforts alone won’t be enough to ensure we can continue to make the investments needed to grow our business profitably. We’ve also had to make the difficult decision to implement reductions among our dedicated teams. These reductions will take place over the next few months and total approximately 5% of all staff roles. There is no easy way to share this news and our focus will be on making this transition as easy as possible for our dedicated colleagues with enhanced severance packages and career service offerings.
Over the next few weeks I will be meeting with many of our teams to share more details and answer your questions. I’m sincerely grateful for your patience and, most of all, your hard work and dedication. I’m always here for anything you may need in the meantime.
My best,
Roger
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