Time Warner Dumping Its Magazines? Not So Fast.
by Peter Kafka
Posted on September 28, 2009 at 3:00 AM PT
Add another voice to the chorus of people who think Time Warner will get rid of its Time Inc. magazine group: Media investor Gordon Crawford is predicting that CEO Jeff Bewkes will shed his conglomerate’s namesake publishing unit.
Crawford’s thinking: After Time Warner ditches AOL, which is scheduled for a spinoff later this year, the company will ditch its magazine business as well. That will leave it with a portfolio made up only of a movie studio and cable networks, and a big cash pile to play with.
Time Warner won’t comment, but I’m sure the company has heard Crawford make this prediction before. His Capital Research Global Investors owns more than eight percent of Time Warner shares, which means he gets plenty of access to Bewkes and his lieutenants.
But here’s the thing: The body language from Time Warner executives in recent months makes me think they intend to keep at least part of their magazine business in the family. More than body language, actually: “Time Warner without People? I can’t imagine it,” one well-placed Time Warner official told me recently.
That said, I won’t be surprised if the publisher employs fewer people, producing fewer magazines in the future.
Time Warner officials have repeatedly said that Time Inc. has too many titles: The magazine unit publishes 23 magazines in the U.S. How many can you name? And last year’s mass layoffs, while unprecedented for the publisher, were still fairly modest compared to other publishers’ cuts. The six percent reduction left Time Inc. with some 9,400 people on the payroll.
But executives at the publisher love to stress, off the record, that its flagship titles–Time, People and Sports Illustrated–are each on track to generate millions of dollars of profit this year, even though ad pages and revenue are down. And while Time Inc. certainly hasn’t figured out its digital business yet, at least some of its print properties could and should do well on the Web, as People.com is already doing.
There are certainly assets that Bewkes and company could dispose of fairly easily. For instance, its U.K.-based IPC Media unit, which handles many of the 90-plus titles it publishes outside the U.S., is frequently brought up as a sale candidate. But I’d be surprised if he got rid of Time Inc. and its iconic brands altogether.
For the record, here’s how Time Inc. performed in the first half of the year. The company has already said it expects similar numbers for the remainder of 2009 (click table below to enlarge).
Comments
Has you looked into the capital gains taxes involved selling a business that began in 1923?
Posted by Philip Elmer-DeWitt at September 28th, 2009 at 4:10 amNope. But I can’t imagine that’s the driver here. Anyone with accounting expertise want to weigh in?
Posted by Peter Kafka at September 28th, 2009 at 6:03 amYou’re right, that would be as crazy as a company headquartered in the Time-Life Building killing Life magazine. It’ll never happen.
Posted by robert boynton at September 28th, 2009 at 7:40 amOh, I don’t think it’s implausible. As of a few months ago, I was one of the people who thought it was going to happen. But the grunts, murmurs and comments I’m hearing from Columbus Circle make me think that’s not the case now.
Addendum: As readers have pointed out in response to an earlier post on this topic, “Time Warner to dump Time Inc” is a notion that has come up over and over again, for years. That doesn’t mean it won’t happen some day, just that it hasn’t so far.
Posted by Peter Kafka at September 28th, 2009 at 8:01 amIt’s nice that the company is making money from publishing, but the ultimate question is really whether these concerns actually add value to the Time-Warner share price.
I see little evidence that they do – indeed a spin-off would probably unlock a lot of value as the new independent publishing company would be an attractive investment.
Posted by Huey Sheridan at September 29th, 2009 at 6:29 am