The Suite Smell of Success

Publishing companies are hiring top-tier talent, threatening brands' influence

The economic recovery seems to have passed magazines by, but there’s one area that’s still growing: the corporate suite.

At Condé Nast, Dawn Ostroff just hired three new evps as she builds out her new entertainment group team. The company has an internal goal of generating $500 million in revenue in the next three to five years—$300 million of that from nonadvertising sources. To that end, it hired former Lancôme executive Gillian Round as svp of brand development. Elsewhere, enthusiast publisher Bonnier Corp. has created a new corporate brand development position, hiring Julie Smartz from Source Interlink Media. And Hearst Corp. hired its first CTO earlier this year to broaden its digital footprint.

Publishers need to find new revenue streams, and fast. Print advertising was decimated in the recession, and it’s coming back slowly, if at all. But building a new business model on tablets by working with software giants like Apple and Amazon, striking licensing deals and getting subscribers to pay more are tasks best accomplished centrally. “Brands have to be good at doing two things: creating very good content and connecting the consumers to advertisers,” Bonnier CEO Terry Snow said. “We don’t want the brands to go out and negotiate a contract with Google or Yahoo. Then you’re all over the place with best practices, pricing.”

But the corporatization of publishing hasn’t always gone over easily. Jack Griffin found that out at Time Inc. when he tried to make top-down changes at a company where the brands are used to their autonomy. At Condé Nast, Bob Sauerberg faces a similar tension. He won the bake-off for president based on his plan to reduce the company’s dependence on advertising by getting more money from consumers, licensing, digital platforms and corporate services.

That’s caused some chaffing at the magazines, which are used to their brands being at the center of power. Corporate presentations dominated the last publishers’ meeting, traditionally a sales-focused summit; publishers got a Kindle instead of the usual luxury trinket in their goody bags. At the same time, they, like everyone else, are straining to create product for more platforms with fewer resources, since titles haven’t had their budgets restored since they were slashed three years ago in the recession.

Sauerberg emailed that the titles “remain at the center of everything we do” and that the goal of hiring people like Lancôme’s Round was to increase the brand leaders’ scope, “not shift autonomy or power.” Many aren’t buying it, though. “We’re bringing in 90 percent of the revenue, and we’re asked to do more with less,” one executive groused privately. “The message gets sent that our importance is diminished.” Perhaps the biggest fear for Condé Nast is the idea that now they’re just like everyone else.