Newspaper article International Herald Tribune

Time Warner Considers Getting Rid of Magazines

Newspaper article International Herald Tribune

Time Warner Considers Getting Rid of Magazines

Article excerpt

The company is in early discussions with Meredith Corp. to put most of Time Inc.'s magazines into a separate, publicly traded company that would also include Meredith titles.

CORRECTION APPENDED

Time Warner is in talks to shed much of Time Inc., the magazine publisher and the foundation on which the media conglomerate was built, according to people involved in the negotiations.

Time Warner is in early discussions with 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 Ladies' Home Journal and Better Homes and Gardens.

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 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 U.S. 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 for 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 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.

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 New York skyscraper, has long been a symbol of publishing in the city. Meredith's roots date to 1902 and the creation of Successful Farming magazine. It owns some of the largest-circulation American 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 report on the talks comes days after Time Inc. said it would lay off 6 percent of its 8,000 employees. Its overall revenue has declined about 30 percent in the past five years.

In recent years, Time Warner has tried to trim assets unrelated to the television and movie production business. It has divested itself of AOL, Time Warner Cable, Warner Music Group and Time Warner Book Group.

Jeffrey L. Bewkes, chief executive of Time Warner, has previously denied reports that he would sell or spin off Time Inc. He frequently talks about the division's strongest brands as, essentially, cable channels, and he has mandated that Time Inc. make its magazines available on digital devices.

"They're printing pages right now, but they're also on electronic screens with moving pictures," Mr. Bewkes said in an earlier interview. "A cable channel like TNT or TBS," he added, is "pretty much the same as what People or Time or InStyle should do."

Keeping Time, Fortune and Sports Illustrated would allow Time Warner to maintain its name and historical roots, at least until a buyer with interest in the remaining titles emerged. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.