3:54 p.m. | Updated What do you do with iconic magazines no one seems to want?
That is the question Time Warner is currently grappling with as the company tries to close a deal with Meredith Corporation that would spin off its Time Inc. magazines into a separate company with Meredith’s titles.
On Wednesday, three people briefed on the negotiations, who could not discuss private conversations publicly, said Meredith and Time Warner executives could not agree on what to do with four Time Inc. titles: Time, Fortune, Money and Sports Illustrated.
Time Warner still wants to complete the deal, but if talks fall through, the media giant could spin off Time Inc. on its own, without a partner, or keep its 21 magazines, the people said.
Time Warner had considered keeping the four news and sports magazines, which executives originally believed have synergies with its CNN cable channel. But the thinking on the magazines, which have faced industry-wide downturns in revenue, has changed, these people said.
Under the initial deal that has been discussed for weeks, Meredith, which publishes stalwarts like Ladies’ Home Journal and Better Homes and Gardens, would combine its magazines with Time Inc.’s publications, including InStyle, People and Real Simple, into a separate company. The new company would borrow money to pay a one-time dividend of around $1.75 billion back to Time Warner.
That company would essentially be a women’s magazine publisher focused on strong female-friendly titles like People and Ladies’ Home Journal. Meredith executives have privately said that Time, Fortune, Money and Sports Illustrated wouldn’t fit, according to one of the people briefed on the discussions. Plus, they are expensive to operate.
Another sticking point in the negotiations is IPC Media, a London-based magazine company owned by Time Inc. that publishes a mix of general interest and upmarket titles like In Style, Country Life and Decanter. IPC also includes an advertising business and a news trade and sales distribution company called Marketforce.
Founded by Edwin Thomas in 1902 with the publication of Successful Farming magazine, Meredith, based in Des Moines, Iowa, has always been a folksy domestic company with strong roots in the Midwest. Time Inc.’s international business would make for an odd pairing.
In addition to its 18 magazines, Meredith owns 13 local broadcast television stations including My KSMO TV in Kansas City, Mo., and WGCL 46 in Atlanta, which would remain in the existing Meredith structure.
The Time Inc. domestic titles that are at issue in the negotiations have struggled in recent years because of a tough advertising market and declining newsstand sales. Time, Fortune and Sports Illustrated all experienced declines in advertising pages in 2012 compared with 2011, according to the Publishers Information Bureau. Time’s advertising pages declined by 12.2 percent and Sports Illustrated’s by 5.5 percent. Money’s pages dropped by 5 percent and Fortune experienced a 4 percent decline.
Time and Fortune have experienced overall declines in their circulation in the past five years of about two percent, according to the Alliance for Audited Media. But they have also suffered big declines in newsstand sales. Fortune’s and Time’s newsstand sales fell by 33 percent and 45 percent, respectively, from 2007 to 2012. Sports Illustrated suffered a 46 percent decline in newsstand sales. Money took the biggest hit with an overall circulation decline over the past five years of 7.6 percent and a 50 percent decline in newsstand sales.
Meanwhile, InStyle, a property that is far more desirable to Meredith, has seen its advertising pages grow by 5.4 percent between 2011 and 2012. Its overall circulation rose over the past five years by 4 percent. Its newsstand sales dropped by 24 percent.
Spokesmen for Time Warner and Meredith declined to comment on the negotiations.
Article source: http://mediadecoder.blogs.nytimes.com/2013/03/06/fate-of-four-time-inc-magazines-are-an-issue-in-talks-with-meredith/?partner=rss&emc=rss