Condé Nast plans to cut 5% of its workforce, acknowledging the toll of digital video’s shift toward short-form fare inspired by TikTok.
The parent company of well-established media brands like Vanity Fair, GQ and The New Yorker will cut about 270 employees from its global ranks of about 5,400. CEO Roger Lynch informed staffers about the cutbacks this morning in a memo. (Read it below.)
Condé Nast Entertainment remains active in funneling a number of projects to streaming services, movie studios and TV and podcast networks. Agnes Chu exited as head of CNE last month in a restructuring, but the company still has about 70 projects in development and 10 in active production.
Digital video is beset by challenges, however, as Lynch acknowledged in his memo. “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),” he wrote. “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.”
Like other traditional publishers, Condé Nast has been managing through ongoing declines in print circulation and advertising and looking for new horizons online. Times have turned difficult for many sellers of digital ads in recent months, though the current quarterly results have shown marked improvement at bellwether companies like Meta and Alphabet.
Lynch, whose background includes executive stints at Pandora and Sling TV, became CEO of Condé Nast in 2019, tasked with overhauling the company for the digital age.
Here is Lynch’s full memo:
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.