November 26, 2017

The $3 billion Sunday evening sale of Time Inc., long the king of magazine companies, is stunning for not being stunning. It will now be a footnote, albeit an important one, to a digital revolution that has altered the basic business models of once omnipotent media companies.

But it doesn't necessarily mean that famous titles such as Time, Sports Illustrated and People will disappear, or that large cadres of journalists should be freshening up their resumes as pink slips are sent their way. It's likely a bit more complicated — including the ultimate sale of those same famous publications by their new owner.

The publisher of the hallowed titles, and many more, announced its purchase by Meredith Corp., publisher of Better Homes & Gardens, among others, and itself long a major (if smaller) player in the now embattled magazine industry, for $18.50 per share in an all-cash transaction valued at nearly $3 billion. The New York Times had earlier reported the imminent nature of a deal that, as it repeated after the deal was formally announced, is financially assisted by the ideologically conservative Koch brothers.

It means that two very shrewd and efficient companies, Meredith and Hearst, will be the industry's two prime players, said Samir Husni, head of the Magazine Innovation Center at the University of Mississippi and a longtime industry analyst.

Ken Doctor, a print industry analyst, said, "Meredith has always had surer instincts, if more prosaic ones. It gave up being a magazine company long ago and proclaimed itself the country's best women's audience market. In that sense, it understand cross-title aggregation (of audience) and of slicing and dicing cohorts for digital targeting. In addition, long before the Times and others latched on to branded content as a new revenue stream, it was experimenting, and then perfecting, content marketing. Which, of course, tied well together with that women's marketing position."

"Short story on Time Inc: It's long been a player in the major print-to-digital transitions, but seldom a leader. That includes paywalls, branded content (growing out of legacy custom publishing), events, breaking news emphasis, wine clubs, probably now podcasts."

He recalled Pathfinder, one of the earliest would-be aggregators of company titles.

You don't recall? Well, said Doctor, "Great idea, and again inconsistent execution. It has experimented with paywalls, but its pay subscription strategies have been inconsistent and confusing to readers."

"Put it all together and this is consolidation that was almost meant to be."

Husni underscored that, print industry problems aside, "There's still a lot of money to be made in the magazine business. And the people who have always been frugal in running the business are still doing well. Like Hearst and Meredith. Those who were bloated are the ones having problems," including Time Inc.

Husni noted that weeklies with giant editorial operations — with many hundreds of people — have largely existed only in the United States. Go elsewhere, notably Europe, and counterpart magazines, including excellent ones, have operated with far fewer. The magazine industry here, he said, was so successful that it didn't know what to do with the money other than hire. Like the newspaper industry, it's now paying the price and enduring painful change in its business model.

Meredith and Hearst will be the biggest magazine companies in the world, he said. But he did not discount the possibility of Meredith ultimately selling some of the more famous Time Inc. publications, notably the weeklies, given its being accustomed to running monthlies (Better Homes & Gardens is still a monster, with a 7.6 million monthly circulation).

"And they probably could make more money from selling those than they are paying for the whole company. There is still a lot of power in the brands of People, Time and Sports Illustrated." And, as much as some at those magazines might gag, one potential bidder for one or more (if they were ever put on the auction block) could be President Trump chum David Pecker, whose American Media Inc. publishes the National Enquirer and who earlier this year purchased Us Weekly. 

Should journalists be quaking in their boots?

Husni thinks not necessarily. Meredith has generally been a good place to work ("Perhaps it's the Midwest tradition," he says, alluding to a company based in Des Moines) and, in theory, he does not foresee dramatic cost-cutting.

Both Time Inc. and Conde Nast, another major industry power, recently announced substantial layoffs and cuts in the frequency of certain magazines amid their similar, inevitable shift to their digital operations.

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New York City native, graduate of Collegiate School, Amherst College and Roosevelt University. Married to Cornelia Grumman, dad of Blair and Eliot. National columnist, U.S.…
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