Commentary

Conde Nast Biography Eerily Foreshadows Next Recession

A new biography of Condé Nast has more details about how his business setbacks affected him personally, leading me to ponder what the next recession will do to the publishing industry.

“Condé Nast: The Man and His Empire” by Susan Arnold builds on prior biographies of the pioneering publisher of Vogue and Vanity Fair with quotations from letters that Nast wrote to his second wife, Leslie Foster, who was 35 years younger than him. He describes professional disappointments that must have stung deeply after a storied career of building an international magazine empire.

The market crash in 1929 that ushered in the Great Depression hammered the value of Condé Nast Publications; its stock fell from a peak of $93 to $4.50 a share. He lost control of the company, but continued to run it while coping with health problems and a divorce from Foster.

When he died in 1942, his estate was valued at $21,600, while his debts totaled more than $5 million.

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Condé Nast Publications recovered during the 1940s and 1950s under Nast’s successor, Iva “Pat” Patcévitch, who Nast had hired as a personal assistant in 1928 after meeting him at a party in Manhattan. The Newhouse family bought the company in 1959 — and the rest is history.

Nast’s personal debts, equal to about $80 million in today’s dollars, made me think about his terrible reversal of fortune.

Some of his financial woes must have been self-inflicted — or perhaps imposed in grueling divorce settlements. He had a reputation for living in luxury, an image he actively cultivated as an arbiter of taste, quality and style — Vogue incarnate.

While the Great Depression was ruinous for Nast, the Great Recession that followed the 2008 financial crisis was terrible for the publishing industry. Advertisers slashed their media budgets and prepared to endure an uncertain period. Print ads never recovered, as audiences migrated to digital media, mobile apps and social networks.

To spur the last recovery, central banks like the Federal Reserve slashed interest rates to record lows and started buying up assets, while the U.S. government went ever deeper into debt to fuel spending.

During the next recession, those policy makers are in a weaker position to stimulate the economy by urging more debt-fueled spending — which is President Trump’s current prescription as the federal deficit balloons past $1 trillion next year.

But no one has ever defied the business cycle, and this record-long recovery must end sometime. Publishers need to be prepared for that growing possibility.

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