Laura Lang, chief executive of the Time Inc. division of Time Warner, which is in early discussions to sell most of its magazines.
Time Warner in talks to sell off majority of magazines
- Article by: AMY CHOZICK and MICHAEL J. de la MERCED
- New York Times
- February 13, 2013 - 10:35 PM
Time Warner is in talks to shed much of Time Inc., the country’s largest magazine publisher and the foundation on which the $49 billion media conglomerate was built, according to people involved in the negotiations.
Time Warner is in early discussions with the Meredith Corp. to put most of Time Inc.’s magazines — including People, InStyle and Real Simple — into a separate, publicly traded company that would also include Meredith titles like Better Homes and Gardens and Ladies’ Home Journal.
The new company would then borrow money to pay a one-time dividend back to Time Warner, essentially turning what appears to be a corporate spinoff into a sale. The figure being discussed is $1.75 billion, according to the people involved in the negotiations, who requested anonymity to discuss private conversations publicly.
The deal under consideration is one of several options that Time Warner is exploring to reduce its troubled publishing unit. As part of the agreement, existing shareholders in Time Warner and Meredith would receive stakes in the new venture. That venture would be primarily a women’s magazine company, expanding on Meredith’s stable of lifestyle publications with strong female readership, especially in the Midwest.
Time Warner would continue to control the news-based magazines Time, Fortune and Sports Illustrated, along with Money magazine. Another person involved in the negotiations said Meredith did not want those magazines — including the standard-bearer Time, which is expensive to operate and reported a 23.2 percent decline in newsstand sales in the second half of 2012 — to be part of the deal.
Spokesmen for Time Warner and Meredith declined to comment.
The new company would allow both Meredith and Time Warner to insulate their other assets from the troubled magazine business. It would also give Time Warner the benefit of a large payday in the form of a dividend without having to resort to an outright sale, which could have much harsher tax implications.
Like Time Inc., Meredith has a long and lucrative history in the women’s magazine market, and both companies have emphasized consumer marketing, wringing value from their subscriber lists at every turn.
But in other ways, the joining of the two would involve some remarkable adjustments. The Time-Life Building, a “Mad Men”-era skyscraper in the middle of New York, has long been a symbol of Manhattan publishing. Meredith’s roots, meanwhile, date to 1902 and the creation of Successful Farming magazine. It owns some of the country’s largest-circulation women’s magazines but maintains popular, folksy titles like Country Life and the carpentry magazine Wood.
It is unclear whether the new company would move some former Time Inc. employees to Des Moines, Iowa, where Meredith is based.
The talks come days after Time Inc. said it would lay off 6 percent of its 8,000 employees. Its overall revenue has declined roughly 30 percent in the past five years.
Time Inc. and Meredith have a recent connection. Jack Griffin, a former Meredith executive, had a brief and stormy reign as chief of Time Inc. before Laura Lang took over in January 2012 — a tenure of less than six months that highlighted the culture clash between the companies.
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