McKinsey & Co.—the consulting firm that was associated with magazine closings, layoffs and deep budget cuts at Condé Nast—is hard at work again inside 4 Times Square.
McKinsey has been hunkering down with publishers in what insiders describe as the newest phase of the firm’s work there. According to people familiar with the process, the consultants have been asking questions about how the publishers run their businesses and where they see growth opportunities.
Word of McKinsey’s activity is bound to stoke some concerns inside Condé, given what happened back in 2009. Facing a deep decline in ad dollars, Condé—which had always been known for its lavish spending—brought in McKinsey and then, based on its recommendations, closed Gourmet, Cookie, Modern Bride and Elegant Bride; laid off staff; and slashed budgets company-wide.
The Condé insiders who spoke with Adweek believe that McKinsey isn’t looking to repeat the cuts of two years ago but is assessing the profitability of various brand extensions—a process that could lead to some of those brands being changed or scaled back.
As part of its mission at Condé, McKinsey is said to be working on a project that would help the company determine how to price its digital products. One area that could include is tablet magazines. Condé Nast has been aggressively developing tablet versions of its magazines over the past year and has experimented with various cover prices.
Asked for comment, a Condé spokeswoman described McKinsey’s effort this way: “This is not a company-wide effort or project. McKinsey is working with a single department with an eye towards growth, not cost-cutting or reduction.”
Since 2009, the company has instituted a push to decrease its reliance on advertising by bringing in more revenue from the consumer side of the business. To that end, editors and publishers have been charged with coming up with new business ideas.
But one executive says that there’s been a growing divide among those who have adapted to the new order and those who haven’t.
“The publishers who get it have embraced it,” the executive said. “The ones who don’t are struggling.”