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 Time Inc, whose titles include People, Sports Illustrated and its
namesake Time magazine, will now operate without the cushion
provided by such lucrative Time Warner Inc cousins as the HBO family
of pay-TV channels or the Warner Bros movie studio.
The spinoff, which follows a strategy pursued by News Corp and other
media companies, is a response to a steady decline in magazine
circulation and advertising revenue as consumers shift to reading
news and entertainment content on smartphones and tablets.
Ripp said in an interview on Monday that Time Inc, no longer
beholden to its parent for capital, could now plow more cash back
into its business and take the company beyond its core print
products. He sees acquisitions in newsletters and the digital sector
as a possibility.
"I think you're going to be seeing lots of acquisitions from us.
Some smaller and some a little bit bigger, but I'm not looking at
anything for a $1 billion right now," Ripp said. There's nothing
like that in my sights."
Shares closed 18 cents lower, or 0.8 percent, at $23.30, after
trimming a decline of as much as 6 percent.
As part of the spinoff, Time Warner shareholders received one share
of Time Inc stock for every eight shares of Time Warner stock. Based
on 110 million shares outstanding, Time Inc had a market value of
roughly $2.6 billion.
Time Inc publishes more than 90 titles, including the business
magazine Fortune, and operates 45 websites.
The magazine unit has slashed its workforce in recent years, a trend
that is expected to continue under Ripp. The company, which cut 600
jobs in 2013, now has about 7,800 employees.
Ken Doctor, a research analyst at Outsell Inc, said Time Inc won't
have an easy time as it plays catch-up with faster-growing
Internet-based media companies.
"You can manage declines but at some point you've got to have a way
to turn around that story," Doctor said.
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Ripp acknowledged the difficulties facing his company but said it
could follow some of the strategies that are working for its
competitors.
He said the company could find new revenue streams by offering
products that are not necessarily print-based but are related to
specialty areas it serves. For example, the company, which has two
magazine titles dealing with wine, could acquire wine-oriented
newsletters, sponsor vineyard tours and other events, produce
videos, create apps and cull related data.
Between 2011 and 2013, Time Inc's revenue fell 9 percent to $3.35
billion, while operating profit dropped 40 percent. The company has
also taken on $1.4 billion in debt, partly to help fund a one-time
dividend to Time Warner shareholders.
Several media companies, including News Corp, the publisher of the
Wall Street Journal and owner of Fox News, have recently separated
their print properties from faster-growing TV and cable businesses.
Tribune Co also plans to cleave off its newspaper properties from
its TV stations this year.
(Reporting by Jennifer Saba and Liana B. Baker in New York and Soham
Chatterjee in Bangalore; Editing by Nick Zieminski, Ted Kerr and
Jonathan Oatis)
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