A Watershed as Time Inc. Faces Its Untethering

By Carr, David | International Herald Tribune, February 15, 2013 | Go to article overview

A Watershed as Time Inc. Faces Its Untethering


Carr, David, International Herald Tribune


In shearing off its print division, Time Warner is following a path laid down by News Corp., which is letting its newspapers fend for themselves.

How toxic have print assets become? This toxic: Media companies have begun to quarantine them.

On Wednesday, Time Inc., the largest magazine publisher in the United States, found itself at the wrong end of a 10-foot pole. Its corporate parent, Time Warner, which has a broad and lucrative array of entertainment assets, was making plans to spin off much of the tattered print unit in a shotgun marriage with Meredith, a Midwest- based company that was trying to do much the same thing.

Under the plan, which is far from final, the two companies would contribute magazines to create a new, publicly held company that would be left to make its own way.

In shearing off its print division, Time Warner is following a path laid down by News Corp., which announced last year that its print and entertainment assets would be split into separate divisions. Its stock hit a five-year high when the plan was floated last June, and sometime early this summer there will be two companies, Fox Group and News Corp., that will allow the fast- growing film and television assets to grow unencumbered by legacy print businesses.

Print publishing may have lost significant currency with consumers and advertisers in a digital age, but investors have a far deeper animus. They see little possibility that the business as a whole will right itself, and they find its lack of growth wanting compared to the cable, television and film businesses that are now the epicenter of the media universe.

Time Inc. may be baked into the name of Time Warner, but it long ago lost salience as a significant player in the company's business. Earnings at Time Inc. dropped 5 percent last year, and the division now contributes less than 12 percent to overall sales at the company. The Time & Life building, a "Mad Men" era edifice in the middle of New York's Midtown, was long a revered totem of the publishing business.

To people in the industry who came of age back when things were good, Time Inc. was legend, having grown up not just on the force of its journalism but on tales of editors' offices the size of racquetball courts and liquor carts rumbling through the hall spreading cheer and an aura of privilege.

The news of a possible sale of its magazine division comes at a time when Time Inc. is laying off some 6 percent of its global work force, and many of those who remain wonder whether their jobs, if they continue to have them, might require them to move to Des Moines, Iowa, the headquarters of Meredith.

It was a bit of a moment for the people at Time Inc. and for the publishing business as a whole. Even though Time Warner has said that it will hang on to Time, Fortune, Sports Illustrated and Money, the profits from those Olympian sounding titles are meager: less than 10 percent of the division. Time Warner is keeping them in part because they might bolt on to a reconceived CNN television network, and in part because, well, no one wanted them.

The new entity, meanwhile, will lean hard on People, as close as the magazine industry has had to a money machine, with sales of almost $1 billion last year. But even that juggernaut has slowed: Newsstand sales of People declined 12.2 percent in the second half of 2012 from a year earlier, according to the Alliance for Audited Media. …

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