SOURCE: The New York Times
At Time Inc., a Jittery Reckoning on the Day After the Sale
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 Corporation in a $2.8 billion deal made possible by an equity infusion from Koch Industries, the sprawling conglomerate run by Charles G. and David H. 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-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 R. Luce, the mood grew somewhat contentious, according to people who attended. Employees demanded to know if the Kochs, the multibillionaire brothers known for throwing their weight behind conservative causes, would compromise their editorial integrity.
One employee, asked Rich Battista, Time Inc.’s chief executive, how much money he would personally gain from the sale. (Mr. 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, although it was not yet clear what would become of it under its new minders.
“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, the editor in chief 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 morning.
Over the course of an hour, Mr. 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.”
Mr. 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 work force in the last decade.
Meredith makes for an unlikely Time Inc. caretaker. A media company built on publications that celebrate domestic life, it has shown no past interest in current events, celebrity, sports and business — the very subjects that make up the bulk of the material in Time Inc.’s best known magazines.
In 2013, a deal between Meredith and Time Inc. collapsed reportedly because Meredith did not want to acquire four of Time Inc.’s signature publications — Time, Sports Illustrated, Fortune and Money.
It remains possible that Meredith will try to sell off titles including Time, Fortune and Sports Illustrated after the deal closes, and some current and former Time Inc. employees have wondered whether or not the Kochs themselves may have an interest in buying them.
“I think if we were being a little paranoid, we would say, ‘Yes, it sure looks like the Kochs will take those titles,’” Reed Phillips, a managing partner at the investment bank Oaklins DeSilva & Phillips, said. “But in reality, I don’t think it will work that way.”