The two media companies are pooling their procurement, production and circulation management operations in a new independent company, PubWorx, which will be owned 50:50 by the duo.
It will be headed by Al Perruzza, the former executive vice president of business operations at Reader’s Digest. He becomes president and chief executive officer of PubWorx.
Perruzza said he had spent his whole career “developing and perfecting end-to-end operational functions at scale”.
As well as providing services to its joint owners, PubWorx will also offer its expertise to other publishers or organisations that want to tap into its know-how and procurement clout.
One senior UK magazine procurement head told PrintWeek: “I think it's a really interesting idea and something that has obvious benefits. I wonder what their supply chain thinks of it though! In terms of print and paper can it go lower on price over here without wiping out most of that chain in the UK?”
A paper supplier added: "We're not particularly keen, obviously. In North America they've had a long-term joint co-operation to buy newsprint for many years anyway, so the procurement aspect is not surprising. What's more interesting is the production side, considering they are two publishers who compete against each other with some of their titles."
Hearst and Condé Nast said there were not currently any plans to set up a similar organisation in the UK or Europe.
PubWorx will officially begin operating at the end of this month, with at least 130 staff. A spokesman said there could be a small number of redundancies as a result of bringing together the two teams.
“There will be some minor reductions but that was not the intent – this is about creating a new independent company that will not only support Condé Nast and Hearst but be available to the industry of publishers,” he said.
Condé Nast chief executive Bob Sauerberg said: “We are looking forward to the new company developing untapped business opportunities with its unique position in the market,” while Hearst Magazines president David Carey said PubWorx would free its joint owners to concentrate on “innovation, content creation and advertising revenue.”
The two companies also worked together to set up magazine marketing and distribution business Comag, which they still jointly own in the UK. The Comag business in the US was sold off four years ago.
