Time Warner Chief Executive Jeff Bewkes has decided Time is no longer right… (Bloomberg )
There's no more Time Inc. at Time Warner.
Time Warner said it is spinning off its Time Inc. magazine unit -- home to such titles as Time, People, Sports Illustrated and Fortune -- into a separate, publicly traded company. The move comes after talks to merge Time Inc. with Meredith Corp., another magazine publisher, collapsed.
“After a thorough review of options, we believe that a separation will better position both Time Warner and Time Inc.," said Time Warner Chief Executive Jeff Bewkes, who added that the move will allow the company to "focus entirely on our television networks and film and TV production businesses" and give Time Inc. "the flexibility and focus of being a stand-alone public company."
The talks with Meredith, which became public in recent weeks, fell apart over disagreements on the valuation of the magazines and how much debt the new company would carry, according to a person close to the situation.
The move marks the end of an era for the company. Founded in 1922 by Henry Luce, Time Inc. started as one magazine and grew into an empire of more than 100 titles. Along the way it created the pay cable channel HBO, and swallowed Warner Communications and Turner Broadcasting.
But the magazine industry has been struggling for years, and sentimentality wasn't enough for Bewkes to keep Time Inc. In 2012, Time Inc. had revenues of $3.4 billion, a decline of 7%. Operating income fell 25% to $420 million.
Time Inc. Chief Executive Laura Lang, who took the job only a year ago, will also leave the company. In a memo to Time Inc. staffers, Lang said that "taking the company through a transition to the public markets is not where my passion lies."
The spinoff of Time Inc. is the latest move by Bewkes to shed the company of its non-television and film holdings. Since becoming chief executive of Time Warner in 2008, the company has gotten rid of its cable systems and AOL.
Despite the fact that there will no longer be a Time in Time Warner, the company said it has no plans to change its name. Besides Warner Bros., Time Warner's assets include Turner Broadcasting, home to cable networks CNN, TNT and TBS, and the pay cable channel HBO.
Time Warner said the spinoff should be completed by the end of the year and will be tax free to its shareholders.
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