Glittering past, edgy present
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 Corp in a $2.8 billion deal made possible by an equity infusion from Koch Industries, the sprawling conglomerate run by Charles and David Koch.
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, Iowa-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 Luce, the mood grew somewhat contentious. Employees demanded to know if the Kochs, the multibillionaire brothers known for throwing their weight behind conservative causes, would compro- mise their editorial integrity.
One employee, asked Rich Battista, Time Inc’s CEO, how much money he would personally gain from the sale. (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.
“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, editor-inchief 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.
Over the course of an hour, 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”.
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 workforce in the past decade.
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”.
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,” 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.
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.
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 Donald 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.”