As the opening bell of the New York Stock Exchange rang this morning, 91-year-old publishing juggernaut Time Inc. officially made its public debut after a contentious and lengthy spin-off process from corporate parent, Time Warner Inc., which may be looking to get younger and hipper by buying a piece of a younger media empire: VICE.
In what will be a very public test of the print industry in a world overtaken by digital players like Vox and BuzzFeed, Time Inc. is now the only publicly-traded company in the US with just magazines in its portfolio, adding pressure to the digitally-challenged publisher who will now rely solely on its media brands including TIME, Sports Illustrated and People for its future fortunes.
The media company, renowned for an impressive empire that includes more than 70 overseas and 23 domestic magazines, has for the last decade seen revenues fall by 34 percent and cut its operating profit by 59 percent. Overall magazine circulation has dropped 1.4 percent in the second half of 2013 compared to the second half of 2012, according to Audited Media, with paid subscriptions, which account for 90 percent of total circulation, falling flat in the same period.[more]
Trying to not be just another casualty of the migration to digital, Time Inc. plans to continue trimming its workforce, specifically editorial, in order to “right-size the organization consistent with our current revenues,” CEO Joseph Ripp wrote in an internal memo in February following a round of layoffs. “We will constantly readjust and recalibrate as we build our future. As I have frequently said in conversations with many of you, we can continue the recent pattern of annual layoffs for years to come or we can get ahead of and then reverse this trend by developing the investment capital and the ideas to restore our business.”
Charged to save their own skin, Time Inc. will primarily rely on advertising and subscription sales to keep itself afloat—although siginificant drops in ad sales continues to be one of the main reasons for the print industry’s demise. But with all bets off, the company is challenging the norms of print publishing, including placing ads on the covers of Time and Sports Illustrated.[more]
— Time Inc. (@Time_Inc) June 9, 2014
The near century-old publisher, which has over 7,000 employees, is investing in digital talent to build out online businesses based on its magazine brands, including “video and a lot more experiential events” from the company’s brands, Ripp said in an interview with Fox. “With the brands we’ve got, the cash flow we’ve got, the opportunity we have to talk to CMOs in America, and all of the people that we track in our database, we have a lot of opportunity going forward.”
On the down side, Time Inc.’s stable of titles is losing cross-promotional support from tie-ins with CNN TV and online, with Fortune and Money recently untethering their websites from CNN.com.
Ripp said the company, which can now invest in itself rather than funnelling cash upwards to Time Warner, will look to better utilize its creative talent to create more immersive experiences. Time Inc. is in the market for a Chief Data Officer to manage and extrapolate information from the company’s 150 million-person subscriber database.
Proving its digital intentions, it last week acquired family scheduling app Cozi; it’s working on 120 sports, a streaming joint venture that includes major US baseball, basketball and hockey leagues; and has a partnership with social Q&A site Quora. Time Inc. also showcased some 50 properties at the recent NewFront digital ad sales content bazaar in New York.
But Ripp’s plans may seem like pipe dreams to some who have watched the print industry fall at the hands of a more limber, personalized digital platform. “Print advertising has been going down quarter after quarter for some years. It’s a very difficult environment…I hate to say people can delude themselves, but they can,” said Edward Atorino, an analyst at the Benchmark Company. “Particularly people in the media business.”
Analysts suggest Time Inc. can profit by diversifying its portfolio much like its competitor Meredith Corporation, the publisher of Fitness and Ladies’ Home Journal, did with its acquisition of two local TV stations last year.
“For anyone who remembers a time when sexy glossies filled our mailboxes and the supermarket checkout line was a buffet of impulse buys, the conspicuous lack of analysis on Time Inc. is a sad sign of what’s happened to the legacy of Henry Luce, the publishing mogul who launched the title as the country’s first newsweekly in 1923,” said Atorino.
“In fact, it’s now hard to remember when magazines were sexy,” he added. “If Time Inc. can turn that perception around, it will have won half the battle … There is some magic to making success in the media business. If you don’t have that magic, you’re in big trouble.”
As for its former parent, Time Warner has relaunched its corporate website with a focus on storytelling, and may be looking to acquire VICE Media, the provocative (and advertiser-friendly) Canadian media brand that produces a TV series for Time Warner’s HBO, has had a production deal with CNN, and operates two popular YouTube channels.
According to Sky News, Time Warner is looking at acquiring a stake in VICE and may use it as the basis to make over its ailing HLN (Headline News) channel, in a deal rumored at $2.2 billion, and previously held talks with VICE to revive its iconic Life brand.
While VICE and HLN may seem worlds apart, HLN head Albie Hecht is eager to make HLN skew younger and attract millennials. Interestingly, he formerly ran Viacom’s Spike TV and Nickelodeon Entertainment, while VICE is advised by former Viacom CEO Tom Freston, a longtime friend of Time Warner chairman and CEO Jeff Bewkes.
It was Freston who helped VICE head Shane Smith attract the attention of Rupert Murdoch last year sell a five percent stake in the company to 21 Century Fox. Now it remains to be seen if Bewkes, free of Time Inc., will similary take a slice of VICE in a bid to goose his media empire.
Who’s heard of VICE media? Wild, interesting effort to interest millenials who don’t read or watch established media. Global success.
— Rupert Murdoch (@rupertmurdoch) October 13, 2012
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