At Time Inc., a Jittery Reckoning on the Day After the Sale ... Green Rules apply
When employees of Time Inc. trundled into a corporate auditorium on Monday, the atmosphere was funereal.
The night before, many of them had been stunned by the news that the venerable publisher of Time, Fortune, Sports Illustrated and People had agreed to sell itself to the Meredith Corporation in a $2.8 billion deal made possible by an equity infusion from Koch Industries, the sprawling conglomerate run by Charles G. and David H. Koch.
Many employees of Times Inc. had been stunned by the news that the publisher had agreed to sell itself to the Meredith Corporation.
Drew Angerer/Getty Images
The announcement of the sale had in some ways ended years of dread inside Time Inc. The company had been floundering since it was spun off from Time Warner in 2014, and everyone who worked there had little doubt that it would eventually come under new ownership.
The agreement with Meredith — the Des Moines-based publisher whose portfolio is largely focused on lifestyle magazines like Better Homes and Gardens, Family Circle, Parents and Family Fun — had also uncorked an existential reckoning within Time Inc.’s downtown Manhattan headquarters.
During two meetings held in an auditorium named for Time Inc.’s illustrious co-founder Henry R. Luce, the mood grew somewhat contentious, according to people who attended. Employees demanded to know if the Kochs, the multibillionaire brothers known for throwing their weight behind conservative causes, would compromise their editorial integrity.
One employee, asked Rich Battista, Time Inc.’s chief executive, how much money he would personally gain from the sale. (Mr. Battista demurred, but according to regulatory filings, he could walk away with some $15 million.)
The questions captured a profound sense of loss afflicting a company that had once defined modern magazines, although it was not yet clear what would become of it under its new minders.
“It was a once very powerful, very important, very profitable force in the global publishing industry and an important player in the journalism world,” John Huey, the editor in chief of Time Inc. from 2006 to 2012, said on Monday. “It’s now a severely wounded animal.”
Meredith’s top executives, however, were more upbeat. “This is truly a transformative moment for the Meredith Corporation,” Stephen M. Lacy, the chief executive, said during a call with investors on Monday morning.
Over the course of an hour, Mr. Lacy and other company leaders addressed questions from analysts about its strategy. While the call apparently helped electrify Wall Street — Meredith’s stock price shot up more than 10 percent for the day — it did little to quell the anxiety among the people working at the company it had acquired.
In an interview on Monday evening, Thomas H. Harty, Meredith’s president and chief operating officer, said his company had not made any decisions about selling Time Inc. titles, though he did not reject the notion outright.
“We really don’t have any particular plans for any part of the portfolio yet,” he said. He added that Time, Fortune, Money and Sports Illustrated were “really iconic brands that have been underperforming.”
Mr. Harty also said Meredith had “no plans to move any editorial or sales and marketing jobs from New York” and also did not expect “for the foreseeable future” to move Time Inc. employees out of their current offices. He added that layoffs are likely at Time Inc., which has drastically reduced the size of its work force in the last decade.
Meredith makes for an unlikely Time Inc. caretaker. A media company built on publications that celebrate domestic life, it has shown no past interest in current events, celebrity, sports and business — the very subjects that make up the bulk of the material in Time Inc.’s best known magazines.
In 2013, a deal between Meredith and Time Inc. collapsed reportedly because Meredith did not want to acquire four of Time Inc.’s signature publications — Time, Sports Illustrated, Fortune and Money.
It remains possible that Meredith will try to sell off titles including Time, Fortune and Sports Illustrated after the deal closes, and some current and former Time Inc. employees have wondered whether or not the Kochs themselves may have an interest in buying them./p>
“I think if we were being a little paranoid, we would say, ‘Yes, it sure looks like the Kochs will take those titles,’” Reed Phillips, a managing partner at the investment bank Oaklins DeSilva & Phillips, said. “But in reality, I don’t think it will work that way.”
Spokesmen for Meredith and Koch Industries have said the Kochs would have no influence over the magazines. Koch Equity Development, the private equity arm of Koch Industries through which Meredith received an infusion of $650 million, will not have a board seat. Meredith said the firm would “have no influence on Meredith’s editorial or managerial operations.”<
Time Inc., the publisher of Time, Fortune, Sports Illustrated and People,
had been floundering since it was spun off from Time Warner in 2014
Mark Lennihan/Associated Press
In a merger agreement filed with the Securities and Exchange Commission on Monday, Meredith said Koch Equity Development would meet with the company’s senior management four times a year and would have the right to appoint an observer to attend board meetings, if Meredith declined to pay the firm its expected dividend.
“We’ve agreed to meet with them just like we do with any other Wall Street analyst,” Mr. Harty said.
He added that Meredith’s senior management team had never discussed the deal with the Kochs themselves. “No one’s ever met with the Koch brothers,” he said.
The sale of Time Inc. underscored how far the publisher has fallen since its days as an arbiter of American culture. From their cavernous offices within the Time-Life Building overlooking Rockefeller Center, Time Inc.’s editors once commanded the attention of presidents and shaped global discourse.
Time magazine made the news accessible in staccato reports. Life magazine, in its large-format heyday, captured world leaders, Hollywood stars and soldiers at war through vivid photography and silky prose. Sports Illustrated was a bible for fans of Muhammad Ali, Willie Mays and Michael Jordan.
Fortune did not limit itself to industry titans but also covered people living in poverty, as it did with “People and Places in Trouble,” a photo essay by Walker Evans. And People magazine ushered in modern-day fame culture by making celebrities seem relatable and everyday people seem like stars.
Time Inc. had seemingly found a way to keep itself vibrant into the new century when it merged with Warner Bros. in 1989. In 2014, however, it found itself spun off from Time Warner. Since then, it has struggled to offset steep declines in print advertising and circulation.
With a scattershot business strategy, it now offers insurance for pets and a Sports Illustrated subscription streaming service for Amazon. Perhaps its biggest claim to fame in recent months was some unsolicited attention Time received from President Trump over the weekend about its “Person of the Year” issue.
“The reality is that it was a print company that produced great consumer brands but they were not brands for which it was easy to make a transition in an age of mobile,” Norman Pearlstine, a longtime Time Inc. executive and its editor in chief from 1995 to 2005, said.
“You can point to lots of things that might have been done differently or might have been done better,” he added, “but I’m not sure any of that could have overcome that basic reality.”
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by SYDNEY EMBER
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