Time Warner will spin off Time Inc., the nation's largest magazine publisher, by year's end, the conglomerate announced on Wednesday. Time Inc. will then be an independent, publicly traded company, while its former owner, Time Warner, retains its magazine-inspired name.
Time Warner had been trying to sell most of Time Inc.'s titles, including People and InStyle, to Meredith, which publishes magazines such as Ladies' Home Journal and Fitness. A new merged company would oversee magazines with a similar audience -- lifestyle titles appealing to a mostly female readership.
But those negotiations fell apart, and the New York Times reported just minutes before the Time Warner announcement that Time Inc. also wanted to unload its four iconic titles -- Time, Sports Illustrated, Forbes and Money. Meredith was not interested in those titles.
While those more news-focused publications have many benefits for a company that also owns CNN and HBO, Time Warner seems to think its Time Inc. unit will be more valuable if kept together.
"A complete spin-off of Time Inc. provides strategic clarity for Time Warner Inc., enabling us to focus entirely on our television networks and film and TV production businesses, and improves our growth profile," Time Warner CEO Jeff Bewkes said in a statement. "Time Inc. will also benefit from the flexibility and focus of being a stand-alone public company and will now be able to attract a more natural stockholder base."
While Time Inc. remains the largest publisher, the entire magazine industry has been hit by declining advertising revenue. Time Inc. advertising revenue fell by five percent in fiscal year 2012, and Time Inc. announced in January that it would lay off roughly 500 staffers.
Time Warner reported $6.1 billion in profit that fiscal year, and $463 million of that came from publishing. That figure represented a 20 percent decline from the previous year.
Time Warner also announced Wednesday that Time Inc. CEO Laura Lang will depart once Time Inc. can stand on its own but will remain until a successor is found. She has been in the post since November 2011.
"Laura indicated to me that we should find a different kind of CEO for this new public company, and I respect her decision," Bewkes added. "She has been a great partner who has given Time Inc. forward momentum to make this transition possible, and I look forward to working with her to select the right leader to head the company as an independent entity."