Two high-profile potential buyers emerged in the media in the past two weeks, bringing the question of a Time Inc sale back to the fore.
The company will report its Q2 earnings on Aug. 8, and even if the numbers are sunnier, it’s unclear how it could turn around the business enough to avoid a sale in the near future.
Nonetheless, Time Inc is publicly holding fast to the claim that it isn’t for sale. A spokesperson gave this comment for this story: “We are excited about the strategic plan we’ve communicated and our momentum against that plan.”
The strategic plan includes: “expanding and diversifying revenues and content through brand extensions across all areas, including TV, OTT, events, licensing, new products, and strategic partnerships”; “further enhancing data, targeting and self-service programmatic capabilities”; “portfolio rationalization”; and “continued aggressive reengineering of cost structure.”
To translate: ramping up video and digital experiments; serving readers with better tech and data; and layoffs.
In June, Time Inc announced it would lay off 300 people. But even before that announcement, the company had been steadily showing the door to a slew of writers, editors, art staff, and sales execs, through a combination of layoffs and voluntary buyouts.
Layoffs and buyouts
The magazine brands Fortune, Money, and Sports Illustrated, in particular, have seen an exodus in the past three months. In less than a year, Money has cut at least 12 edit staffers from an already-slim staff. (In April, Time Inc merged the art and photo departments of Fortune and Money magazines, resulting in cuts.) In May, Fortune.com cut almost all of its contracted freelancers. (A spokesperson for Time Inc confirmed the cuts but would not give a number.) Fortune assistant managing editor Nicholas Varchaver left for ProPublica this month. Time Inc chief content officer Norm Pearlstine, who spent a decade as Time Inc’s editor in chief, stepped down this week.
Many former staffers have taken to their Facebook pages to sound off. A former Fortune writer who was there for nearly a decade wrote that the magazine increasingly “wanted aggregated junk for cheap clicks on the website.” Another former Fortune writer, who left a few years ago, posted on Facebook that Time Inc appears to be running, a “desperate hamster wheel race… a short race to oblivion—chasing clicks.”
Just this week, the Wall Street Journal reported that top Time Inc brass recently met to explore a potential name change for the whole company—a step potentially aimed at making it more attractive to a buyer. A source at Time Inc confirms to Yahoo Finance that the meeting took place, and that “Life,” as the Wall Street Journal first reported, was the most popular choice.
Of course, the financial hurdles Time Inc faces are not exclusive to Time Inc. They are the same challenges the entire media industry faces.
In the last month, a slew of digital news outlets, including Fox Sports, MTV, and Vocativ, laid off significant numbers of writers to focus more on video. That is: digital-only outlets are struggling just as much as legacy portfolios that have one foot in print and one in digital.
If you take Time Inc., with its rich history and still-respected magazine names, as a bellwether for peers like Hearst and Condé Nast, the picture it paints for the business is not a pleasant one.
Messy management
Some people inside Time Inc say that management is somewhat to blame for its fall, not just industry headwinds. (Time Inc has had five CEOs in the past six years.) One recently departed editor from a Time Inc magazine tells Yahoo Finance, “Great brands, but laziness and entitlement led them to the position they’re in.”
As its print business spirals, Time Inc has launched a march of new digital-only brands, many of them all-video. Those brands include: Mimi; The Snug; The Drive; The Pretty; Well Done; Extra Crispy; and Coinage. Digiday, in March, reported that “the expectations from the top didn’t match the resources put behind the launches” of these digital brands. Mimi has already been rolled into InStyle’s website, and The Snug has been rolled into Real Simple.
Meanwhile, the legacy magazines have cranked up the volume of short-form news posts online: last year, Time Inc created a “shared digital newsroom” with 10 cross-magazine desks, organized by beat.
The biggest push is, unsurprisingly, in video. Last year Time Inc launched PEN (People Entertainment Weekly Network), an over-the-top (OTT) video app; CEO Rich Battista said at NewFronts in May that PEN has seen millions of downloads. In the fall, it will launch Sports Illustrated Network, an OTT product with documentaries, fantasy sports analysis, and SI Swimsuit content.
As Time Inc has shifted its focus to video, print issue counts have shrunk. As recently as 2015, Sports Illustrated put out 51 issues. In 2016, it went to 45 issues. This year, Sports Illustrated will put out just 38 issues. Time Inc says its 2018 print plan is not finalized yet, but two sources at Sports Illustrated tell Yahoo Finance the total will likely shrink again, potentially to as few as 24, which would turn the magazine into a bi-monthly.
Expect this media empire to sell, either as a cohesive unit or as piecemeal magazine brands.
As Amazon’s surprise purchase of Whole Foods underscored, every company is for sale these days, always. The recently departed Time Inc exec puts it this way: “Their whole game right now is, ‘Let’s do two or three things to make it look like we’re doing a lot of new stuff.’ And then by the end of the year it’ll be back on the auction block, with a spruced-up story.”
Disclosure: The author worked at Fortune, a Time Inc title, before joining Yahoo.
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Daniel Roberts is a writer at Yahoo Finance, covering media, sports and tech. Follow him on Twitter at @readDanwrite.
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