Time Warner to Spin Off from Magazine Publishing by the End of 2013

Michael Teague |

Time Warner Center TowersPerhaps in an attempt to quarantine the worst performing component of its holdings, Time Warner, Inc. (TWX) announced that it will spin off Time, Inc., its magazine business, making it into its own publicly traded company.

In the process, Time Warner will likely retain a significant amount of the shares of its spin-off, and Time Inc.’s current CEO Laura Lang will step down. Time Warner CEO Jeff Bewkes said in a memo today that Time, Inc. would be independent by the end of 2013.

The news puts to rest rumors about Time, Inc.’s attempts to sell some of its magazine holdings to Meredith Corp. (MDP), the Iowa-based publisher of Better Homes and Gardens. Before Time Warner’s decision to sever its core operations from the publishing business, the outlines of a possible deal included merging Time’s lifestyle and entertainment publications with Meredith’s women’s magazines.

Bewkes framed the decision as one that would be beneficial to both entities; saying that it would provide “strategic clarity for Time Warner, Inc., enabling us to focus entirely on our television networks and film and TV production businesses”, while Time Inc. would ostensibly benefit from “being a stand-alone public company … able to attract a more natural stockholder base.”

The move would mark the third time in Bewkes’s five-year tenure as CEO that Time Warner has spun-off one of its holdings. Both Time Warner Cable, Inc. (TWC) and AOL, Inc. (AOL) began standing on their own feet in 2009.

While Bewkes tried to highlight the upsides to Time, Inc.’s independence, there is no hiding the fact that the publishing industry as a whole has been decimated by the rise of online media, particularly the loss of advertising revenue that has been the result.

Shares of Time Warner gained as much as 2.4 percent in early trading to $56.83, while Meredith Corp. fell as much as 9 percent to the mid $36 level.

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Companies

Symbol Name Price Change % Volume
BNFT Benefitfocus Inc. 39.82 0.14 0.35 103,318
MDP Meredith Corporation 50.98 0.37 0.73 159,296
TWC Time Warner Cable Inc n/a n/a n/a 0
TWX Time Warner Inc. New 76.73 -0.58 -0.75 2,178,969

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