TIME INC SELLS TO MEREDITH, BACKED BY KOCH BROTHERS
Along chapter in media history came to an unlikely close on Sunday night with a sale agreement for Time Inc, the publisher of once-prestigious magazine titles including Time, Sports Illustrated and People.
The Meredith Corporation — the owner of Family Circle, Better Homes and Gardens and AllRecipes — agreed to purchase Time Inc in an all-cash transaction valued at nearly $3 billion. The deal was made possible, in part, by an infusion of $650 million from the private equity arm of Charles G and David H Koch, the billionaire brothers known for using their wealth and political connections to advance conservative causes.
The deal could represent the beginning of the end for one of the country’s most celebrated magazine publishers, whose titles commanded the attention of global leaders and chronicled world events, sometimes with striking photography. It also brings together two companies that have long courted different audiences, seeking readerships that echoed the places they called home. Time Inc is New York to its core. The company was founded by Henry R Luce and Briton Hadden, who had worked together in their college days at the Yale Daily News. Together they hatched the idea of a fast-paced weekly that would capture an increasingly hectic and urbanised world.
After the successful start of the business magazine Fortune in 1930, Luce added Life magazine to Time Inc’s growing stable and transformed it into a wide-ranging general interest magazine that made use of glorious photography to capture movie stars, world leaders and exotic, far-flung places. In the middle of the 20th century, Time Inc even had its own film arm, with “The March of Time” series of news shorts that played in movie theatres before the main feature.
Meredith, based in Des Moines, is a Midwestern publisher through and through. Its founder, Edwin Thomas Meredith, entered the media business in 1902 with a magazine called Successful Farming. He soon began the still-thriving Better Homes and Gardens, which has a circulation of more than 7 million.
Its popular magazines have long focused on families and women, taking aim more at Middle America. It has eschewed an expensive headquarters in Manhattan and maintained a diversified portfolio — the company also owns local television stations — that has allowed Meredith to better weather the economic storm that has faced print publishers. But as Meredith has stood relatively strong, Time Inc has stumbled. The company failed to keep pace as the industrywide transformation from print to digital rendered old methods of magazine-making obsolete and publishing companies crumbled under the pressure of declines in print advertising and circulation.
For Meredith, a hardy company with a loyal print readership, the acquisition of Time Inc represents a long-elusive victory.
“This is a transformative transaction for Meredith Corporation,” Tom Harty, Meredith’s president and chief operating officer, said in the company’s statement announcing the agreement.
Charles Koch, the chief executive of Koch Industries, and David Koch have long sought to shape political discourse through their support of nonprofit organisations, universities and think tanks. But in its announcement of the deal, Meredith said that the private equity fund, Koch Equity Development, would not have a seat on Meredith’s board of directors and would “have no influence on Meredith’s editorial or managerial operations.”
Steve Lombardo, a spokesman for Koch Industries, also said that the Kochs had no plans to take an active role in the expanded company. “This is a passive financial investment made through our equity development arm,” Lombardo said. The company’s role in the transaction, he said, was similar to that of a bank. Lombardo said the company is constantly evaluating investment opportunities.
“We’re looking at deals across all sectors, all industries,” he said. “This just happened to be one that made sense.” A deal between Meredith and Time Inc fell apart in 2013 after Meredith reportedly said that it did not want to acquire some of Time Inc’s best-known titles, including Time, Fortune and Sports Illustrated. Meredith also expressed interest in buying Time earlier this year before it walked away — in part because it could not secure sufficient financing. The Kochs helped the firm overcome that problem.