Meredith Corp., the publisher of magazines such as Family Circle and Better Homes and Gardens, is looking to break up Time Inc. after completing the $2.8 billion purchase of the media company.
Time Inc.'s roster of magazines includes People, Time, Fortune, Sports Illustrated and Entertainment Weekly. The company has struggled with declining print ad revenue while trying to boost growth in digital ads, which are dominated by Google and Facebook.
Meredith likely would sell off titles like Time magazine and Sports Illustrated and cut jobs, while holding onto hugely profitable titles like People magazine, unnamed sources told the Financial Times.
Charles and David Koch, the conservative billionaires, provided $650 million to support the deal in return for preferred equity. They will not have any editorial or operational influence on Meredith’s titles or seats on its board. The deal is expected to close in the first quarter.
Several groups have shown interest in buying Time assets, such as David Pecker, publisher of the National Enquirer tabloid and a close ally of President Donald Trump. A team including Seagram scion Edgar Bronfman Jr. and Len Blavatnik, the billionaire owner of Warner Music Group is also interested, along with Jimmy Finkelstein, owner of political publication The Hill.
Meredith agreed to pay $18.50 a share for Time Inc., 46 percent higher than the share price on November 15 before Meredith’s latest interest was reported. The deal was approved by the boards of both companies, and includes the assumption of Time Inc.’s debt.
“We haven’t made any decisions about the portfolio,” Tom Harty, Meredith president and chief operating officer, said. “We are in the content business and these are iconic brands. There will be people affected by the consolidation of the companies but we don’t have specific targets in terms of the number of people affected.”
Meredith plans to save $400 million to $500 million in the first two years after the transaction by cutting overlapping costs in finance, operations, circulation and physical facilities.
Reed Phillips, managing partner at the investment bank Oaklins, DeSilva & Phillips, told NBC News that one of the main differences between the two companies was salaries.
“A Time Inc. editor might earn a million, where a Meredith editor might earn half of that," he said. "They can take out costs in circulation, production and accounting. They can also eventually reduce salaries and get them more in line.”
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