Time Warner drops plan to send some mags to Midwest publisher Meredith - spins them ALL off instead!
In a dramatic switch , Time Warner is not after all pursuing a merger which would have seen a clutch of its magazines - including world top seller People - going to Midwest publishers Meredith.
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Instead the entire Time Inc. magazine group is to be spun off, letting the parent focus on film and TV, such as CNN. Time Warner, which also owns Britain's biggest consumer magazines publisher, IPC Media, has ended talks with Meredith.
The company's own magazine , New York based Fortune, asked waspishly, "Will Time Warner have the audacity to retain the "Time" name? After all, the flagship magazine is being spun out as part of this transaction. Perhaps Turner Warner? Or Printless Corp?"
Time Inc. CEO Laura Lang will leave her post, but will stay on during the transition period "to help pick her successor," the Wall Street Journal said. In a letter to her staff, reported in USA Today, she said, "After considerable thought, I have decided that taking the company through a transition to the public markets is not where my passion lies."
Time Inc. hired Lang last year to oversee a strategic turnaround to focus more on digital properties. She also oversaw a move to lay off about six per cent of its workforce earlier this year.
For months Time Warner and Meredith had been negotiating a deal under which most of the Time Inc. magazine group would be merged with Meredith's magazines into a newly created company, said the WSJ.
The company would not have included titles including Time, Fortune or Sports Illustrated, which would have stayed behind in Time Warner.
Time Warner CEO Jeff Bewkes said in a statement."After a thorough review of options, we believe that a separation will better position both Time Warner and Time Inc.
"A complete spinoff of Time Inc. provides strategic clarity for Time Warner Inc., enabling us to focus entirely on our television networks and film and TV production businesses, and improves our growth profile.
"Time Inc. will also benefit from the flexibility and focus of being a stand-alone public company and will now be able to attract a more natural stockholder base."
Meredith Chief Executive Stephen Lacy said the talks were "at Time Warner's initiation." He said "there were natural synergies between our two portfolios; however, we respect Time Warner's decision."
He said Meredith remains "open to continuing a dialogue on how our companies might work together on future opportunities."
In the end Time Warner decided the benefits of a complete separation were greater than striking the Meredith deal, a person familiar with the situation told the WSJ.
In 2012 Time Inc. had $3.43 billion in revenue, down from $3.68 billion the previous year. The division accounted for just 12 per cent of Time Warner's total revenue.
A spokesman said Time Warner hasn't yet decided if it would drop Time from its name.
A big factor in the magazine division's decline, said the WSJ, was a sharp drop in the newsstand sales of People magazine, which had long generated more than half of Time Inc.'s profits, according to people familiar with the matter.
Newsstand sales were down 12 per cent in the second half of last year.
Still, Time Warner's magazine titles are "considered some of the most iconic publishing brands" said USA Today and account for a significant chunk of the US magazine market.
In 2012, Time Inc.'s US magazines accounted for 21.5 per cent of total U.S. advertising revenue in consumer magazines, excluding newspaper supplements.
People, Sports Illustrated and InStyle were ranked Nos. 1, 3 and 5, respectively, in ad revenue in 2012.