How Condé Nast is like General Motors.

Media criticism.
Oct. 5 2009 7:44 PM

How Condé Nast Is Like General Motors

The magazine empire as car wreck.

Gourmet Magazine.

The recession didn't become real for the foodies at Slate until this morning, when Condé Nast shoved the 69-year-old magazine Gourmet into the whirling jaws of an InSinkErator. Don't even talk to Gourmet fans about switching to a different food magazine, like Condé Nast's own Bon Appétit. You might as well ask them to substitute cottage cheese for ricotta.

Gourmet wasn't the only title Condé Nast shuttered this morning. With a cost-cutting study from McKinsey & Co. as its blade, the company also axed Cookie, Modern Bride, and Elegant Bride. This follows earlier efforts at right-sizing when the company jettisoned Men's Vogue, Domino, Portfolio, and the men's fashion trade magazine DNR in the spring.

Although the privately held Condé Nast isn't as financially distressed as the bankrupt General Motors, and although the magazine business couldn't be more unlike the car business, the two distraught companies share woes. Both succeeded in segmenting the market with semi-independent divisions that were once unique and distinct but that have since faded into one, much to the confusion of consumers. Both have dramatically dumped once-valuable properties. Both have allowed divisions to operate like independent fiefdoms at the expense of the company's greater financial good. Both have established cultures of privilege for top employees, and both appear to have woken up to their problems too late.

Condé Nast loyalists would claim that Gourmet magazine, acquired in 1983, and Bon Appétit, acquired in 1993, didn't really overlap. Although both magazines were about food, Gourmet was more high-end, aspirational, and literary. Bon Appétit was utilitarian, serving readers one brow level down from Gourmet.

But over time, the differences between the two magazines grew so faint that Gawker asked in March, "Why does Condé need both?" An August charticle in a Wall Street Journal blog detailed the redundancies. Condé Nast bosses have failed to define the place where Bon Appétit begins and Gourmet ends. It's only natural that the two magazines have ended up chasing the same readers and the same advertisers to the detriment of both.

In theory, it makes a lot of sense for a business to encourage internal competition between divisions. But it can easily backfire. At General Motors, executives originally cultivated distinct personalities for its Chevrolet, Oldsmobile, Pontiac, Buick, GMC, and Cadillac divisions. But those divisions began to blur into one in the 1970s. In the 1990s, General Motors bleached from Saturn (a GM startup) and Saab (an acquisition) their distinctive, desirable qualities.

At GM, the least successful divisions have often found it easier—at least politically—to compete against their corporate brothers instead of the real competition (Ford, Chrysler, Toyota, et al.). If Chevy had a successful SUV, Buick wanted an SUV. If Chevy had a successful two-seater sports car, Pontiac wanted one, and so did Saturn. If Buick succeeded in selling luxury, the other divisions demanded luxury vehicles. By indulging its divisions, General Motors encouraged them to steal market share from one another rather than to go after the other car companies' markets.

As long as the markets boomed, managers at Condé Nast and General Motors could ignore wasteful overlapping and duplication of effort. But then came the crash. The damage to the magazine sector has been almost as catastrophic as it has been to the car industry. For example, in May, Media Post reported that Gourmet's year-to-date ad pages had tumbled 46 percent and Bon Appétit's had dropped 34.5 percent.

General Motors rendered a correct diagnosis of its redundancy problem in 2004, but its elimination of the Oldsmobile division was like putting a Band-Aid on a cancer lesion. The company insisted on keeping the rest of its divisions. Not until bankruptcy gave General Motors no choice did it finally give them up. The company is currently winding down its Pontiac and Saturn brands and is in the process of selling its Saab, Opel, and Hummer operations.

Condé Nast first acknowledged its redundancy problem by scuttling House & Garden magazine in 2007 to give its other big "shelter" magazine, Architectural Digest, a fighting chance. That move, too, proved to be a Band-Aid on a lesion. The closings so far and those announced today will give magazines like Bon Appétit and Bride more breathing room. But like General Motors, Condé Nast will probably refuse to make the additional cuts it needs to make, like closing Details (in addition to Men's Vogue), so GQ can prosper and weeding its fashion titles—Vogue, Teen Vogue, Glamour, and Allure—for commercial redundancy.

One last General Motors-Condé Nast parallel worth pursing: Both companies have been badly run by executives who invested more effort in pursuing perks, status, and empire-building than chasing profits. Writing in a slightly different context, Condé Nast veteran Tina Brown summed up what ails the magazine company in an April post on the Daily Beast: "The court of the Sun King is a rats' nest of competing favorites who jostle for the 81-year-old supremo's [S.I. Newhouse] attention."

******

Disclosure: The New Yorker Festival, a Condé Nast operation, hired me in 2008 to appear on a panel about political coverage. I left Wired, The New Yorker, and Vanity Fair out of my Condé Nast calculus because they don't seem to compete directly with their corporate cousins. Tell me how I'm wrong via e-mail: slate.pressbox@gmail.com. See my Twitter feed for cheap enlightenment. (E-mail may be quoted by name in "The Fray," Slate's readers' forum; in a future article; or elsewhere unless the writer stipulates otherwise. Permanent disclosure: Slate is owned by the Washington Post Co.)

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