Condé Nast, the most glittering of all the glossy magazine publishers, is the latest media casualty of the coronavirus pandemic.
On Monday morning, the publisher of Vogue, Vanity Fair, The New Yorker and Architectural Digest, sent a memo to its 6,000 employees around the world from its chief executive, Roger Lynch, outlining pay cuts for high earners and reduced hours for other employees. The memo said the company also planned to seek government assistance in Britain and the European Union.
“It’s very likely our advertising clients, consumers, and therefore our company, will be operating under significant financial pressure for some time,” Mr. Lynch said in the note. “As a result, we’ll need to go beyond the initial cost-savings measures we put in place to protect our business for the long term.”
Those earning $100,000 or more — approximately just under half the company — will have their salaries reduced by 10 to 20 percent for five months, starting in May. Executives in the senior management team, which includes Anna Wintour, the artistic director of the company and its best-known figurehead, will have their pay cut by 20 percent. Mr. Lynch said he would forgo half of his salary. Board members who are not employees of Advance Publications (the holding company that owns Condé Nast), like Domenico De Sole, former chief executive of Gucci Group, will also have a 50 percent reduction in their compensation.
Mr. Lynch said he also expected some layoffs, but didn’t specify how many. “While we consider it a last option, we do expect there will be some role eliminations as part of these efforts,” he said. Those decisions are expected in May. In the meantime, the company has frozen hiring on hundreds of open positions.
Condé Nast also said it would ask for bailout funds in Europe and Britain, where it will also move to implement three-four day workweeks for some employees. The publisher plans to take advantage of the “partial activity” assistance programs in those regions that will make up lost salary for employees who have been furloughed or had their hours cut. In 2019 the company united its American and international arms, which include 11 owned and operated titles, into a single entity. The company has operations in France, Italy, Germany and Spain, as well as Asia, though half of its employees are based in the United States.
Condé Nast would be one of the first publishers to request taxpayer funds. It’s an unusual move for a business that pays high salaries for editors who historically enjoyed perks such as town cars and clothing allowances, and sales executives who sell luxury advertising. It also risks alienating readers, for whom the idea of a gilded publisher requesting funds that could go to suffering workers may be anathema.
Recently two of Condé Nast’s most prominent clients, the luxury groups LVMH Moët Hennessy Louis Vuitton and Kering, reportedly told furloughed employees they would be part of the “partial activity” government programs in France, but were forced to backpedal after peers such as Chanel announced they would bear the costs themselves rather than tap into the public purse.
Magazines had already been on rocky ground before the coronavirus started spreading across the globe, but now the industry is in free fall. Its luxury advertisers, the lifeblood of its fashion and lifestyle magazines, are cutting their marketing budgets or shelving them entirely. Consumers are turning away from fantasy purchases and saving their money for necessities.
Condé Nast had already been re-evaluating its media strategy, refashioning itself to cater to an online audience more attuned to Instagram and TikTok. It has sold off fusty titles and turned once-mighty glossies like Glamour into digital-only enterprises. Following the subscription success of The New Yorker, paywalls went up around Vanity Fair and Wired. Vogue, still the flagship, has also started to embrace digital publishing, though it is still highly dependent on advertising revenue.
As a result, and after several years of losses, the business had been on pace to turn a healthy profit this year. The global pandemic has altered that trajectory, as it has for all other publishers.
“We aren’t alone in needing to take actions like this,” Mr. Lynch said in the memo. “Companies around the world are all facing similar challenges and responding accordingly. But that doesn’t make this process any easier.”