Magazine Giant Condé Nast Posts First Profit in Years Because of Strong Digital Revenue

From a Wall Street Journal story by Alexandra Bruell headlined “Magazine Giant Condé Nast Posts First Profit in Years”:

Condé Nast said it turned a profit last year for the first time in years, a feat the publisher of Vogue, Bon Appétit and the New Yorker attributes to strong digital-revenue growth and cost savings from reorganizing its global operations.

The company recorded nearly $2 billion in revenue last year, a double-digit-percentage increase from 2020….Condé Nast, a unit of closely held Advance Publications Inc., doesn’t make its financial results public. It declined to disclose the size of its 2021 profit or say for how long it had been unprofitable.

Condé Nast Chief Executive Roger Lynch has led efforts to streamline the business, which until recently was a sprawling collection of international publications that essentially operated independently from one another. When he took charge in 2019, after running Pandora Media Inc. and Dish Network Corp.’s Sling TV, Mr. Lynch worked to merge the company’s U.S. and international businesses. The moves included naming Anna Wintour its first-ever global chief content officer, giving her oversight of all world-wide brands owned or operated by Condé Nast except the New Yorker.

The overhaul made it possible for brands such as GQ and Condé Nast Traveler to create distinctive content locally while also running stories that can resonate beyond their regional market in other editions….

For years, Condé Nast failed to turn a profit as print-advertising declines harmed a vital revenue source for publishers. The company lost $120 million in 2017….Condé Nast’s U.S. division had a plan, under previous management, to become profitable by 2020 by diversifying its revenue away from advertising and shedding certain magazine titles.

The publisher in recent years expanded its digital-video offerings and moved some of its titles, which include Wired and Vanity Fair, behind digital paywalls to supplement falling print-advertising revenue.

Mr. Lynch said subscriptions and memberships increased by 14% last year from a year earlier and that growth from digital paywalls had contributed to the company’s return to profitability. Condé Nast had a global digital audience of 360 million monthly average readers last year, he said, a number that excludes the Chinese market.

The company’s consumer business, which includes revenue from subscriptions and e-commerce, currently accounts for about a quarter of its global revenue….The goal in the next four years is for that unit to generate one-third of the company’s revenue. Condé Nast’s primary source of e-commerce revenue is through an affiliate model, meaning it makes money when consumers click on links and purchase products featured in its content.

Condé Nast in recent years has managed through some high-profile internal crises that tested its ability to navigate social change. The company last year parted ways with its incoming Teen Vogue editor, Alexi McCammond, following a backlash around years-old racist and antigay social-media messages. A year earlier, Adam Rapoport, the editor in chief of Bon Appétit, resigned after a photo of him dressed in a mocking depiction of Puerto Ricans resurfaced and angered staffers.

The company resorted to layoffs and furloughs early in the pandemic, though Mr. Lynch said Condé Nast’s total global head count grew by 3% last year.

Mr. Lynch said Condé Nast plans to invest in or possibly acquire companies that produce quality journalism, businesses that complement its subscription offerings such as exclusive membership programs, and technology that supports video or e-commerce capabilities.

“We are definitely starting to turn our sights externally and consider M&A,” he said, adding that the company hasn’t allocated a specific amount of capital for deals.

Speak Your Mind