Magazine giant Condé Nast will cut about 5 percent of its workforce, reversing a high-profile plan to create an in-house video studio to tap Hollywood’s demand for film and television ideas.
The layoffs will affect approximately 270 employees. Roger Lynch, chief executive of Condé Nast, told workers in a memo Wednesday morning that the cuts were a response to pressures from digital advertising, declining social media traffic and changing public behaviors, notably the move to short videos. He said the video business would be integrated with editorial brands.
“While we cannot control the platform’s algorithms or how AI may change search traffic,” Mr. Lynch wrote, “we believe our long-term success will be determined by the development of the many areas that we can control, including subscriptions and e-commerce, where we are directly responsible for the relationship with our audience.
In an interview, Mr. Lynch said that most of the growth in Condé Nast’s video business was happening on platforms like TikTok and YouTube Shorts, which are less lucrative for publishers. He said the company would continue to create videos, with producers teaming up with staffers from magazines like The New Yorker and Vogue.
“Longer videos on YouTube are actually declining year over year,” Mr. Lynch said. “It’s an audience shift, but it was also YouTube pursuing what they were seeing happening on TikTok.”
A decade ago, many digital publishers saw Hollywood as a potential source of cash, where producers and directors would turn their ridiculous magazine stories into screenplays for the big screen. Some have invested heavily in building in-house studios or purchased them, as Vox Media did when it acquired film and television producer Epic in 2019.
Perhaps the most ambitious of these studios was Condé Nast Entertainment, a major division within Condé Nast responsible for developing articles from publications such as The New Yorker, Wired and Vanity Fair – intellectual property, in Hollywood parlance – into major movies and TV shows. . A series of high-profile media executives have been hired to run the division, which was established in 2011, including former CW and Spotify executive Dawn Ostroff and, most recently, Agnes Chu, who joined Disney in 2020 .
The division enjoyed some success. “Cat Person,” a film based on a viral New York short story that explores uncomfortable relationship dynamics, premiered at this year’s Sundance Film Festival. “The Old Man and the Gun,” a 2018 film about an aging bank robber based on a New Yorker article by David Grann, earned a Golden Globe nomination for Robert Redford in the title role.
But the influx of cash from Hollywood has waned of late, with investors expecting streaming services to abandon their growth-at-all-costs approach in favor of profitability. And online audiences are increasingly moving to platforms like TikTok and YouTube, where shorter content is king and monetization elusive.
This left parts of Condé Nast Entertainment on the chopping block. Ms. Chu left her position at the end of October, a move Mr. Lynch flagged last month in a company-wide memo regarding restructuring the management team.
A Condé Nast spokeswoman said “the company would retain the Condé Nast Entertainment brand for the time being,” adding that it had no plans to appoint a new head of the division. The company will continue to develop longer-term projects with studios associated with its magazines. Helen Estabrook, global head of film and television at Condé Nast, will now report to Mr Lynch.
Condé Nast’s business has struggled in recent years, at one point losing about $100 million a year, as the magazine publisher tried to adapt to the digital age. Mr Lynch, who joined the company in April 2019, sought to find new revenue streams and combined the domestic and international divisions.
Mr. Lynch told the Wall Street Journal that Condé Nast made a profit in 2021 for the first time in years. He said this year revenue increased in 2022 but fell just short of its target.
Although advertising is expected to decline slightly this year, Mr. Lynch said in the interview that revenue from digital subscriptions and e-commerce has increased. These divisions are growing quickly, but they still represent a smaller share of Condé Nast’s overall business than advertising.
“Looking back at all the transformation work we’ve done since I got here,” Mr. Lynch said, “some of it initially resulted in staff reductions in some areas, but it has really allowed us to invest in other areas of our business.
Mr Lynch said the job cuts would take place over the coming months. Condé Nast has approximately 5,400 full-time employees worldwide.
Hundreds of Condé Nast staffers unionized last year, forming a group that covered workers at publications like Architectural Digest, Bon Appétit and Vogue. The union is currently negotiating its first contract with the company.