‘The Cleaner’: Conde Nast’s new level-headed leader is a publishing newcomer

Lynch enters the legacy publishing industry as a relatively unknown quantity to publishing veterans. Current and former Condé Nast executives admitted to Digiday that they had never heard of Lynch prior to Thursday’s announcement — though they agreed that his experience made him a smart choice.

Sources that have worked with Lynch in the past say the same. The former physicist, who spent years designing infrared missile systems before pivoting to business school at Dartmouth, is described as methodical and level-headed, equally adept at digging into the weeds and using big-picture thinking to see years into the future. That competence, observers say — and Condé hopes — will trump the fact that Lynch has never worked in publishing.

“He’s kind of the cleaner,” said one source that’s worked with him at Pandora. “He comes in, reorganizes, figures out where to focus and execute.”

When Steve and Jonathan Newhouse informed Condé staffers last winter that they had begun searching for a new CEO, observers mused that there were few executives in the media world suited to the task. In addition to reining in costs, Condé’s new boss would have to guide dramatic expansions into new, competitive areas including video, creative services and consumer revenue. Those moves would require new thinking about distribution, organization and strategy — plus managing a large-scale shift in priorities.

Lynch, at various junctures, has tackled all of those. Back in the late ’90s, when he was trying to build Chello, a European broadband internet service provider that eventually expanded to serve 15 different markets, Lynch oversaw a “political,” “mind-numbing” process of taking many companies’ technology and content assets and centralizing them into a single product, said Sudhir Ispahani, Chello’s former CTO.

“He came into a very complex environment,” Ispahani said. “He had to deal with the CEOs of all of these different, loosely-knitted companies.”

Lynch also has experience in managing turnarounds and growing new businesses while keeping an eye on the bottom line. At Dish Network, Lynch oversaw the development of Sling TV, a streaming skinny bundle designed to help the satellite distributor offset the growing wave of cord-cutting. By the time Lynch left in the spring of 2017, Sling TV had grown to an estimated 1.45 million subscribers; today it has 2.4 million subscribers.

At Sling, he also showed patience, waiting until blue-chip networks, including ESPN, agreed to join before launching the product.

“He’s one of the smarter people I know when it comes to where things are headed with [TV] distribution,” a second Pandora source said.

Lynch also has experience making cuts at large organizations without denting employee morale. He led the charge of figuring out where to relocate Pandora’s engineering team while also trimming its workforce by 5 percent, part of a broader effort at cutting costs while investing in newer areas. “He did a masterful job of not alienating anybody,” that second source said.

Lynch also has several years’ worth of experience growing multiple revenue streams simultaneously. At Pandora, he fortified positions the streaming radio pioneer had staked out, acquiring the programmatic audio ads company AdsWizz for $145 million to recast Pandora as a platform, rather than a media company.

But advertising was not Lynch’s chief priority, sources said. Instead, he was more focused on growing consumer engagement with Pandora’s products. He saw a major priority in re-deploying Pandora’s marketing infrastructure so that it could be used to boost the amount of time people spent using Pandora.

During Lynch’s tenure, Pandora’s subscription product, Pandora Premium, grew into a nine-figure source of revenue that accounted for nearly a third of the company’s revenues, according to the company’s final quarterly earnings before Pandora was acquired by SiriusXM.

Those efforts shrank Pandora’s losses and helped nudge its stock price upward. But they were not enough to drive a return to profits.

“He did the best he could do in a difficult situation,” said Michael Pachter, managing director in equities at Wedbush Securities, who noted that Pandora had to compete with bigger, better-capitalized opponents both in digital radio and for subscribers.

Lynch’s new employer faces similarly unfavorable conditions. The legacy publisher reportedly lost $120 million in 2017. And while a mix of cost-cutting and video revenue growth narrowed the gap in 2018, Sauerberg’s strategic plan does not predict a return to profits until 2020. And as Lynch charts that course, the publisher will face intense competition for the attention of both consumers and advertisers. Navigating it will require dispassionate discipline. Luckily for Condé Nast, that is what Lynch is known for.

“What he’s demonstrated at both [Dish and Pandora] is that he’s able to grow a digital business while at the same time be very financially disciplined,” said Amy Yong, an analyst at Macquarie. “I’d say that’s how investors know him.”