Time Warner Expected To Dump Many Magazines

Posted on 3/5/2013 by Jim Pickerell | Printable Version | Comments (0)

In the digital age there is declining interest among consumers and advertisers in print publications. Investors have little confidence that there will ever be a recovery or revival of print. They want the companies they invest in to shed marginally profitable assets and focus on the much more profitable businesses of film and television. Last year earnings for the Time Inc. dropped 5 percent and the magazine division represents less than 12 percent of all Time Warner sales. As a result publishers like Time Warner are looking for ways to reduce their print publication exposure and concentrate their investments on assets with greater growth potential.

Time Warner and Meredith Corporation are in discussions about the possible transfer of  most Time Inc. magazines — including People, InStyle and Real Simple — to a separate, publicly traded company that would also include Meredith titles like Better Homes and Gardens and Ladies’ Home Journal. This new publically held company would be left to survive on its own.

If the deal goes through current shareholders of Time Warner and Meredith would be given shares in the new venture. It appears that Time Warner shareholders would hold about two-thirds of the new company and Meredith shareholders the remainder, but the exact arrangements are yet to be decided.

Since revenue generated by the new company is not expected to grow, the focus will probably be on cutting costs to make the new company profitable.Time Inc. is currently laying off 6 percent of its global work force. Meredith is headquarters in Des Moines and some believe that most of the operations of the new company may be moved there as a cost cutting measure.

Time Warner is expected to hang on to Time, Fortune, Sports Illustrated and Money despite the fact that the profits of these brands are meager as well. It appears that this is more of a defensive strategy to keep these publications out of the hands of the CNN television network than because Time, or anyone else, really wants them. The thinking is that if these brands were spun off to the new company they might try to join CNN in some way and that could harm Time Warner’s television offering.

Copyright © 2013 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-461-7627, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  


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