Time Warner Nixes Meredith Deal, Will Spin Off Time Inc.
Time Inc., one of the world’s largest magazine publishers, will become its own company after a planned spinoff from owner Time Warner, the corporate parent announced Wednesday. CEO Laura Lang is also leaving the company, after a tenure of just over a year.
The decision to divest Time Inc. follows several weeks of ultimately unsuccessful negotiations between Time Warner and Meredith Corp. aimed at an eventual transfer of Time Inc.’s titles to Meredith, or a merger of their magazine operations.
The negotiations foundered on the issue of four of Time Inc.’s largest magazines -- Time, Sports Illustrated, Fortune and Money -- which Time Warner wanted to include in the divestiture.
Meredith Corp., whose magazine portfolio is focused on women’s lifestyle publications, was interested in acquiring Time Inc.’s women-focused titles, including People and InStyle, but balked at buying general interest or men's interest titles.
With an eye to placating shareholders who have called for an outright sale, Time Warner Chairman and Chief Executive Jeffrey L. Bewkes noted the company’s history of successful spinoffs: “As you know, Time Warner successfully completed similar separations in the past few years with Time Warner Cable and AOL. Both of those companies have thrived independently, and I anticipate the same for Time Inc.”
Time Warner has repeatedly come under pressure from shareholders to shed its beleaguered publishing division and focus on more profitable areas like entertainment. Separately, Time Inc. recently undertook another round of layoffs. In January, Lang warned employees that the company would lay off around 6% of its workforce, or roughly 480 out of 8,000 employees.
The last major wave of layoffs at Time Inc. came in fall 2008, when the magazine publisher cut 600 positions -- equal to about 6% of its workforce at the time. From 2005 to the present, the company has shed around 3,480 jobs, or 32% of its 2005 complement of 11,000 worldwide.
In its most recent earnings announcement, Time Warner revealed that revenue from its networks division increased 4% to $14.2 billion in 2012, while Film and TV entertainment saw a smaller decline of 4.9% to $12 billion. The publishing division revenues decreased 6.8% to $3.4 billion.
Time Inc. publishes 21 magazines in the U.S. and more than 70 overseas. Overall revenues, which include subscription sales,
fell 7% to $3.4 billion. Operating income was down 25% to $420 million.
Lang took over Time Inc. in late 2011. She joined from Digitas with the hope her experience would help the company excelerate a digital progression.