February 4, 2016 Last Updated 12:46 pm

Condé Nast and Hearst team up to create new company to handle production and circulation

NYC-based PubWorx will employ about 130 to 140 staffers, with the independent company selling its services to other magazine publishers in the industry

Two of the biggest NYC based consumer magazine companies today announced that they will partner on the creation of a new independent company that will handle production, procurement and circulation management for both companies. Called PubWorx, the company will be led by Al Perruzza, who was named the company’s president and CEO.

magazines Hearst Condé NastLeft unsaid, of course, is the fate of the staff at both magazine companies that currently do production, procurement and circulation work. Obviously, there will be massive layoffs as a result of this decision as reports say that the new unit will have a staff of 130 to 140 employees.

“The primary focus is not outright job reduction but to bring the scale of the two companies together to benefit ourselves and other publishers,” David Carey, president of Hearst Magazines, told <strong>The Wall Street Journal.

Move is somewhat similar to what Advance Publishing has done with its daily newspapers. Advance has created new, separate companies to handle production and editorial, then the existing company is dissolved and the employees forced to reapply at the new companies. Condé Nast is a division of Advance Publications, by the way.

The two companies will seek to have the new company provide services to other publishers beyond Hearst and Condé Nast, thereby becoming a profit center. Ownership of PubWorx will be split 50/50 between the two founders.

Here is the press release for the formation of PubWorx:

NEW YORK, NY – February 4, 2016 – Condé Nast and Hearst Magazines, two of the world’s largest magazine media companies, today announced the formation of PubWorx, a new, independent company that will manage production, procurement and circulation management for both publishers, and offer custom programs across the industry. Industry veteran Al Perruzza, most recently executive vice president, business operations at Reader’s Digest, has been appointed president and CEO of PubWorx, and will report to a board comprised of executives from Condé Nast and Hearst Magazines. The announcement was made by David Carey, president of Hearst Magazines, and Bob Sauerberg, president and chief executive officer of Condé Nast.

PubWorx, a 50/50 joint venture, will incorporate staff and back-office functions from Condé Nast and Hearst Magazines, and will offer third-party companies a range of products and services, including procurement, production, and full-service, end-to-end circulation management operations.

“PubWorx is an innovative new company that combines the commitment to excellence and publishing expertise of both Condé Nast and Hearst, and offers it to third-party companies for the first time,” Sauerberg said. “Having the two parent companies as its first clients sets PubWorx up for success and we are looking forward to the new company developing untapped business opportunities with its unique position in the market.”

“We’re thrilled to continue building our business relationship with Condé Nast,” Carey said. “In addition to serving Hearst and Condé Nast, Pubworx will provide important, turn-key infrastructure for the industry, allowing publishers to access the scale of our two companies for production and circulation functions, freeing them to concentrate on innovation, content creation and advertising revenue.”

PubWorx is the latest instance of Hearst and Condé Nast working together to maximize opportunities; the two publishers formed Comag, a marketing and retail distribution company, nearly 40 years ago. Comag U.S. was sold in 2012; Hearst and Condé Nast continue to own and operate the business together in the U.K. In addition, Hearst Newspapers and Advance Publications, parent company of Condé Nast, have worked together on procurement for many years.

Perruzza is a seasoned publishing executive with a successful track record in both private and public sectors. While executive vice president, business operations at Reader’s Digest, he introduced a global supply chain organization and executed a fivefold improvement of back-office efficiency across Reader’s Digest companies. He holds a Bachelor of Science degree from City College of New York, a Masters from Columbia University and an MBA from Pace University.

“I’ve spent my career developing and perfecting end-to-end operational functions at scale,” Perruzza said. “I’m excited to work with the most talented teams in the business to drive innovation for Hearst and Condé Nast, as well work with colleagues across the industry to build tailored, impactful programs that position their organizations for increased efficiency and growth.”

For clients, services are customized and will include:

Procurement. Purchasing and supply chain management including paper, printing and distribution.

Production. Efficient, high-quality work flows, systems and technologies; quality control and distribution planning for subscription and retail delivery.

Circulation Management. Management of subscription acquisition and retention operations, and retail operations including in-store programs.

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