December 12, 2017

Media Memo: The Kochs Are Inching Closer to Becoming Media Moguls

Meredith, the Iowa-based company behind popular monthly magazines like Family Circle and Better Homes and Gardens, has arranged for a $600 million cash infusion from the Koch brothers through their private equity arm, Koch Equity Development, these people said. Under the terms of the proposal, Koch would receive preferred shares in the company.

According to people involved in the talks, Meredith has also lined up $3 billion in financing from four banks: Citibank, Barclays, Credit Suisse and Royal Bank of Canada. Meredith has been busy lately reviewing Time Inc.’s financials, which have become somewhat complicated, because the company had been in the process of selling several magazines including Sunset and Golf and a stake in Essence.

Meredith has indicated that it would acquire all of Time Inc.’s properties, but was still seeking clarification about the status of those sales, these people said.

The Kochs have long tried to shape political discourse through their support of nonprofit organizations, universities and think tanks. Beyond their flirtation with Tribune, they have expressed little interest in running a media company.

Some Koch allies suggested that the brothers’ investment would be passive and would not give them any operational control over the company. These people said that the Kochs saw a potential moneymaker in Time Inc., rather than a megaphone for advancing their free-market ideology. For that to happen, the storied company, which Henry R. Luce helped found in 1922, would have to morph into an entity able to thrive in the fraught 21st-century media business.

Other Koch associates, however, surmised that the Kochs’ involvement in the possible deal was partly driven by their desire to advance their views. Should Meredith succeed in acquiring Time Inc., Koch Industries would have a stake in a company with access to millions of online and print readers.

“Knowing the Kochs, I think they’d have to see it as a business that could at the same time further their political interests,” said Stanley S. Hubbard, a longtime associate of the brothers and a donor to their advocacy groups.

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Although it now has a diminished role in the crowded landscape, Time magazine, with its influential Person of the Year and Time 100 issues, still reaches a weekly paid audience of roughly three million.

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The trading floor of the New York Stock Exchange. Time Inc. is seen by some as a potential moneymaker for the Koch brothers. Credit Richard Drew/Associated Press

Mr. Hubbard said he doubted the Koch brothers approved of Time in its current form. “In their view,” he said, “they probably see Time magazine as a left-wing rag. I’m sure that they would like to see it be more objective and also to straighten it out to make it a profitable venture.”

Mr. Hubbard, who owns television and radio stations across the United States, said he had not talked with the Kochs about the possible acquisition but had discussed other prospective media investments with them over the years.

Spokesmen for Koch Industries and the Kochs’ political operation both declined to comment. Spokesmen for Time Inc. and Meredith also declined to comment.

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For Meredith, which was founded in 1902, the addition of the Time Inc. titles to its stable would represent the culmination of a yearslong courtship. In 2013, a deal between the two publishers collapsed after Meredith reportedly said it had no interest in some of Time Inc.’s most robust titles, including Time, Fortune and Sports Illustrated.

Meredith was also among the parties circling Time Inc. earlier this year before it walked away in part because it could not secure sufficient financing.

Until now, the Kochs — who lead a company that brings in more than $100 billion in annual revenue — have sought to influence public discourse at some remove from the media business. If Meredith, with the Kochs’ help, succeeds in buying Time Inc., the brothers would join a growing list of billionaire business people with significant stakes in media properties. Warren Buffett’s Berkshire Hathaway company, for instance, owns 31 daily newspapers, and Jeff Bezos owns The Washington Post. Sheldon G. Adelson, a casino magnate and powerful Republican donor, acquired The Las Vegas Review-Journal in late 2015.

The Kochs, who have made a name for themselves as philanthropists with their donations to Lincoln Center, the Metropolitan Museum of Art and the American Museum of Natural History, have preferred to wield their influence away from the glare that comes with owning major media properties. Through a network of conservative donors and advocacy groups, they have spent or raised more than $1.5 billion in an effort to reshape American policy around an ideology based on free-market Austrian economics.

Their foundations have helped fund organizations affiliated with conservative media outlets, including the libertarian Reason magazine and the Daily Caller website. The Charles Koch Institute, one of the brothers’ philanthropic arms, offers a yearlong media and journalism fellowship. David Koch has donated millions to public television.

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Media properties with a wider reach than, say, Reason magazine, like those in the portfolios of Meredith and Time Inc., could amplify the Kochs’ message and complement the work of the groups they support, including the nonprofit advocacy group Americans for Prosperity. The completion of the proposed deal may also give the Kochs a way to merge the vast trove of voter information held by a data analytics company controlled by their network, i360, with the publishers’ data on consumers.

Still, the Kochs would make for unlikely media players, given that they have not exactly been champions of reporters in the past.

Known for harboring a distrust of the mainstream media and what they see as its liberal bias, the Kochs have taken a closed-fist approach to journalists. Until 2015, a website affiliated with Koch Industries, KochFacts.com, published blog posts intended to combat negative coverage of the company and to raise questions about reporters who, in the Kochs’ estimation, had written about them unfairly.

In her book about the Kochs and their influence on modern politics, “Dark Money,” which came out last year, the investigative reporter Jane Mayer described how a private investigation firm had tried to dig up dirt on her after The New Yorker published “Covert Operations,” her 10,000-word exposé on the Kochs. She wrote that she suspected the Kochs had been involved.

In an interview last year with The Financial Times, Charles Koch said he wanted to show that he was not the “evil guy” the press has made him out to be. He also suggested a desire to control a narrative that had long eluded his grasp.

“We’re being attacked every day by blogs, other newspapers, media, people in government,” he said, “and they were totally perverting what we do and why we do it.”

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Article source: https://www.nytimes.com/2017/11/17/business/media/koch-brothers-time-meredith.html?partner=rss&emc=rss

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