3:53 p.m. | Updated Time Warner is in early talks to shed much Time Inc., the country’s largest magazine publisher and the foundation on which the $49 billion media conglomerate was founded, according to people involved in the negotiations.
The company is currently in talks with the Meredith Corporation to put most of its 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 deal being discussed is one of several options Time Warner is exploring in order to reduce its troubled publishing unit, said these people who could not discuss private conversations publicly.
As part of the agreement, existing shareholders in Time Warner and Meredith would receive stakes in the new company, which would essentially amount to a women’s magazine company, led by People, the popular celebrity magazine and crown jewel of Time Inc.’s slate of 21 publications.
Time Warner would continue to control news-based magazines, Time, Fortune, Sports Illustrated and Money. Meredith did not express interest in including those titles and Time Warner believed those magazines can fit into its journalistic efforts at CNN and CNNMoney.com, said a person briefed on the discussions.
A Time Warner spokesman declined to comment. News of the talks was first reported by Fortune, a magazine owned by Time Inc.
The talks come weeks after Time Inc. announced it would lay off 6 percent of its global work force of more than 8,000 employees during an industrywide decline in subscription and advertising revenue. Overall revenue at Time Inc. has declined roughly 30 percent in the last five years.
Time Warner’s history is rooted in Time, the weekly news magazine founded by Henry Luce in 1923 on which the giant media conglomerate got its start. But lately the publishing company’s sluggish performance has stood in sharp contrast to the strong performance at Time Warner’s cable channels like HBO, TBS and TNT.
In the last several years, the company has tried to trim some assets unrelated to the television and movie production business. That included shedding AOL, Time Warner Cable, the Warner Music Group and the Time Warner Book Group.
Jeffrey L. Bewkes, chief executive of Time Warner, has denied reports that he would sell Time Inc. He frequently talks about the division’s strongest brands essentially as cable television channels and has aggressively 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 a previous interview. He added that “a cable channel like TNT or TBS” is “pretty much the same as what People or Time or InStyle should do.”
The company’s exploration of a deal that would allow it to keep male-oriented titles like Sports Illustrated, Time and Fortune would let it maintain its name and historical roots.
“Time’s name is on the door. I think Jeff feels it would be better to hang onto it and not sell it for what would be a low price,” said a person briefed on Mr. Bewkes’s thinking who could not discuss private conversations on the record.
Jack Griffin, a former chief executive at Meredith, served a brief and stormy reign as chief of Time Inc. before Laura Lang took over in January. Ms. Lang, previously the chief executive of the digital advertising company Digitas, stepped in at a tumultuous time after Mr. Griffin was forced out after less than six months on the job. She hired Bain Company, a consultancy based in Boston, to assess the business.
Many of Time Inc.’s magazine titles have been struggling as more readers have been reading material online, and newsstand sales have dropped. Even titles like People, which long helped financially bolster Time Inc.’s less lucrative titles, has suffered. People’s newsstand sales declined 12.2 percent in the second half of 2012 compared to the year before, according to figures released last week by the Alliance for Audited Media. Its advertising pages dropped by 6 percent in 2012 compared to the year before, according to the Publishers Information Bureau.
Last month, Ms. Lang said she was cutting staff 6 percent, or about 480 people. Magazines like Time and People asked employees to take buyouts and said they would lay people off if they did not meet those numbers. Wednesday is the last day for employees to raise their hands for buyouts.
On a conference call with analysts last week, John K. Martin, chief financial and administration officer at Time Warner, said that “very challenging industry conditions weighed” on the company’s results.
The talks come as News Corporation prepares to sever its publishing assets, including newspapers like The Wall Street Journal and The New York Post, from its more lucrative entertainment division, which includes the cable channels FX and Fox News. The separation is expected to be complete this summer.
Christine Haughney and David Carr contributed reporting.
Article source: http://mediadecoder.blogs.nytimes.com/2013/02/13/time-warner-in-talks-to-sell-off-majority-of-magazines/?partner=rss&emc=rss
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