If most of Time Inc., the world’s largest and most famous magazine publisher, may be sold, then so can any other pillar of old media. Rumors are that relatively tiny media firm Meredith Corp. (NYSE: MDP), a publisher of middle-class women’s magazines based in the tiny city of Des Moines, could take over most of Time Inc.’s titles, a sign of just how little major media companies care about their print operations. If this happens, Meredith, with a market value of only $1.7 billion, will become overnight the premier magazine owner in America.
Time Warner Inc. (NYSE: TWX) already has decided that cable content and movies have a better future than magazines do. The Turner division of the conglomerate, founded by maverick Ted Turner, has a value that most experts believe moved beyond that of the nearly century-old Time Inc. many years ago. At least Time Warner still values the future of its ancient Warner Bros. operations. Movies, it seems, have not aged as badly as print. They at least have a bright future in the digital age.
The reason that Time Inc. and other great print properties like the flagships of New York Times Co. (NYSE: NYT) and Washington Post Co. (NYSE: WPO) could be jettisoned by their parents is that none has had the hoped for success online, which might have brought enough revenue to offset troubled print operations. This observation is very old.
Although each of these media has a very large online presence, advertisers have not seen this size and scope as a reason to give them significant support. They have been elbowed aside to a large extent by the big portals, which include AOL Inc. (NYSE: AOL) and Yahoo! Inc. (NASDAQ: YHOO), even though these businesses face revenue growth challenges of their own. Newer media, particularly Google Inc. (NASDAQ: GOOG) and Facebook Inc. (NASDAQ: FB), which would not have been considered media at all just a few years ago, have sucked a huge portion of online advertising out of the hands of competitors. Finally, Amazon.com Inc. (NASDAQ: AMZN) not only has hurt online retailers, it also has undermined the ability of traditional media companies to build e-commerce transaction platforms of their own as a means to make money from their huge reader bases.
One of the reasons Time Inc. is an attractive target is the size of its management staff — those at the top of the pyramid in editorial, advertising sales, circulation and senior executive jobs. Meredith can cut almost all of these expensive people in a consolidation. If this works, the same cost structures could be targets of potential buyers of The New York Times, The Washington Post, the Financial Times and a small number of the other old-line print media companies. Aside from the potential private buyers of these properties, there are media companies that already have built-in management structures of their own, companies like CBS Corp. (NYSE: CBS) and Gannett Co. Inc. (NYSE: GCI).
Time Inc. is on the block. Because of that, every other famous old media brand is as well.