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The proposed sale of Time Inc. for $2.8 billion in cash and the assumption of debt to Meredith Corp. was greeted by managements of both companies with the usual encomiums.
Meredith’s president Tom Harty called the deal “transformative” and said it would create “a powerful media company serving consumers and advertisers alike.” Rich Battista, Time Inc.’s CEO, declared in a statement that the company offered “a portfolio of premium, iconic brands that are well positioned to continue to be powerful voices in media for many years to come.”
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For Meredith, it was a long-sought victory. The publisher, whose headquarters are in Des Moines, Iowa, had twice tried to buy Manhattan-based Time Inc. The third time was the charm, thanks in part to some $650 million in preferred stock from the investment arm of Charles and David Koch (who Meredith says won’t have board seats or editorial influence over the combined company, a caveat that few people in media believed).
But for Time, it was hardly a triumph, and the journalists who work there were angry and despondent at the news, The New York Times reported (calling an all-hands on Monday “funereal.”). The sale highlights the inability of the country’s largest magazine publisher by revenues to succeed as a standalone company after Time Warner spun it off in 2014, despite legendary titles like Time, Sports Illustrated, and People. Time Inc. had reported revenues below Wall Street’s expectations for six consecutive quarters amid plunging print advertising and circulation.
That reflected a deeper, structural decline in a magazine business thoroughly disrupted by the digital revolution. The same forces also have damaged some big rivals, such as Condé Nast, which reportedly will face upcoming layoffs at its own magazines.
So while the sale of a deeply diminished Time Inc. isn’t a surprise, given the dynamics of the business, it is poignant, underlining the loss of stature and relevance for a company that, for decades, defined American media swagger.
The decline of the company was gradual but steady under Time Warner, accelerating over the last few years as Time struggled to develop an internet strategy that would give its brands the online impact they had enjoyed in print for decades. And the 24/7, instant gratification of internet news, so different from the comparatively leisurely pace of monthlies and weeklies, made it difficult for the company to find its way.
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“Time Inc. was…very slow to embrace the internet and to see that the internet was going to be a major delivery format for content in the future,” says Chris Roush, professor at the School of Media and Journalism at the University of North Carolina at Chapel Hill.
“I just don’t think they understood or comprehended the possibilities of what the internet meant for media organizations.”
In 1999, as print advertising and circulation revenue boomed, Time Warner’s publishing segment racked up $4.663 billion in revenue and had operating income of $627 million, according to documents filed with the Securities and Exchange Commission.
By 2016, Time Inc.’s revenues were only $3.066 billion and operating income a minuscule $2 million. In the intervening years, the company sold off some magazines, but the decline was steep and striking. Even Time Inc.’s recent rapid growth in video, which commands much higher ad rates than text articles, couldn’t overcome the deep 9 percent decline in print ad and circulation revenue the company suffered last year alone.
Ironically, Time Inc. was a Web pioneer. The Pathfinder site it launched in 1994 was one of the first “aggregators,” bringing together content from some of its most popular titles in an early portal. However, after reportedly spending $15 million a year on Pathfinder, Time Warner shuttered it in 1999.
Before it could build out individual websites for its prestigious brands, the disastrous 2001 merger with America Online drove Time Warner’s corporate priorities, and titles like Money and Fortune were subsumed under AOL. Very soon after, Time Warner wrote off most of the value of AOL and reported a record $98.7 billion loss in 2002.
Yet once again, rather than strike out on their own, the Time titles were joined at the hip with another Time Warner property, CNN. The news channel did become a major player online and sites like CNNSI and CNN Money got lots of traffic. But again, the Time Inc. brands were buried under the CNN juggernaut.
Only when Time Warner’s CEO Jeff Bewkes spun off Time Inc. as a separate company did the titles finally get their chance, as CNN remained with Time Warner. But by then, upstarts and established companies already had built formidable franchises online in news, business, and sports, and Time Inc.’s offerings were very late to the party. Time Warner also saddled it with $1.3 billion in debt, which gave the new company much less maneuvering room.
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Looking back over two decades, Time Inc. was “often a significant player in a lot of the trends of the time … but seldom a leader in any of these digital categories,” says Ken Doctor, president of Newsonomics.
“They have not figured out from an editorial point of view, from a business point of view, what’s their essential value proposition in the digital age,” he says. “That I think is the core of it.”
As the web, video, and mobile have supplanted print and other traditional media, these magazines, which have employed some of the most illustrious journalists, won awards, and shaped the national agenda, have become less and less central in the media landscape.
That footprint may shrink further: The Financial Times reports that Meredith will explore selling off some of Time’s most famous titles, including Time itself and Sports Illustrated, and slashing hundreds of jobs to reach its target of $400 million to $500 million in cost savings over the next two years.
So, loss of relevance may turn out to be Time Inc.’s greatest failure and its biggest tragedy.
“Wherever you look, it seems like the Time properties are on the periphery of where things are happening and where the momentum is in the areas of journalism [in which] they were once preeminent,” says Edward Wasserman, dean of the Graduate School of Journalism at the University of California at Berkeley.
“I think that history has passed them by.”
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Howard R. Gold is a columnist with MarketWatch and editor of a retirement-investing website, GoldenEgg Investing. He was the founding editor of Barrons.com and also has written for Forbes, Money, and USAToday.