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Pay Cuts Come to Condé Nast, the Glossy Publisher of Vogue and Vanity Fair Pay Cuts Come to Condé Nast, the Glossy Publisher of Vogue and Vanity Fair
(about 3 hours later)
Condé Nast, the most glittering of all the glossy magazine publishers, is the latest media casualty of the coronavirus pandemic. Condé Nast, the most glittering of all 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. Roger J. Lynch, the chief executive of the company behind Vogue, Vanity Fair and The New Yorker, sent a memo on Monday to 6,000 employees around the world to inform them of an austerity plan that includes pay cuts, furloughs and possible layoffs.
“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.”“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. 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, the memo said. Executives in the senior management team, including Anna Wintour, the artistic director and Condé Nast’s best-known figurehead, will have their pay cut by 20 percent.
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. In addition, Mr. Lynch said he would forgo half of his salary, and board members who were not employees of Advance Publications (the holding company that owns Condé Nast), like Domenico De Sole, former chief executive of Gucci Group, would take a 50 percent reduction in their compensation.
The memo said the company also planned to seek government assistance for employees in Britain and the European Union, where it would also move to implement three- or 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. Mr. Lynch did not specify how many layoffs were under consideration.
Condé Nast would be one of the first publishers to request taxpayer funds for employees. 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. “While we consider it a last option, we do expect there will be some role eliminations as part of these efforts,” he said in the memo.
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. Those decisions are expected next month. In the meantime, the company has frozen hiring on hundreds of open positions.
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. The company plans to implement three- or four-day workweeks for some employees in markets such as Britain and the European Union, “in particular where government programs and stimulus packages can help supplement employees’ earnings,” Mr. Lynch wrote in the memo.
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. Condé Nast is not directly asking for government money, but is instead exploring the use of relief programs and stimulus packages in certain regions for furloughed or laid off employees. The company plans to take advantage of the “partial activity” assistance programs in those parts of the world to make up for the lost salary of furloughed employees or those who have had their hours cut.
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. In 2019, Condé Nast united its American and international arms into a single entity. The company has operations in France, Italy, Germany and Spain, as well as Asia, with half its employees based in the United States.
Condé Nast would be one of the first major publishers to take advantage of government programs set up to make funds available to people whose jobs have been affected by the pandemic. Those programs were designed to help companies avoid layoffs, and some of the programs require the employer to request funds. Requesting government assistance would be an unusual move for a company whose high-paid editors have enjoyed perks such as town cars and clothing allowances. It could also risk alienating readers, for whom the idea of a glossy magazine publisher requesting funds for certain employees may be anathema.
Recently, two of Condé Nast’s most prominent clients, the luxury groups LVMH Moët Hennessy Louis Vuitton and Kering, told furloughed employees that they would be part of the “partial activity” government programs in France. Both companies backpedaled after peers such as Chanel announced that they would bear the costs themselves, rather than tap into the public purse.
Magazines were on rocky ground before the coronavirus started spreading across the globe, and the industry is now in free fall. Luxury companies, who provide the ads that are the lifeblood of fashion and lifestyle publications, have cut or frozen their marketing budgets. At a time when more than 16 million Americans are newly out of work, people are turning away from fantasy purchases and saving up for necessities.
Condé Nast had already been re-evaluating its media strategy, refashioning itself to cater to an online audience attuned to Instagram and TikTok. It has sold off certain 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 has started to embrace digital publishing, though it is still highly dependent on advertising revenue.
As a result, and after several years of losses, the company was on a pace to turn a profit this year. The global pandemic has altered that trajectory, as it has for 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.”“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.”