Laura Lang, who was brought on as CEO of Time Inc. in late 2011, will step down after the transition is completed and a new CEO has been identified.
A planned sell-off of most of the magazines to U.S. publisher Meredith will not happen. Neither will Time Warner's plan to hang on to Time, Fortune, Money and Sports Illustrated, as seemed likely under the Meredith deal.
Jeff Bewkes, chairman and CEO of Time Warner, said the spin-off would allow Time Warner to focus on its key assets: its film and TV businesses, a portfolio that includes Warner Bros, HBO and New Line Cinema. It's a strategy Time Warner has been systematically executing since 2004, when Warner Music Group was spun off as a separate company.
Time Warner has shed three other divisions — Time Warner Book Group (2006), Time Warner Cable (2009) and AOL (2009) — in the years since.
Here's Bewkes' statement:
After a thorough review of options, we believe that a separation will better position both Time Warner and Time Inc. 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 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.As we saw with the prior spin-offs of Time Warner Cable and AOL, we expect the separation will create additional value for our stockholders.
Time Inc. is the nation's largest magazine publisher and accounts for a little more than 11% of Time Inc.'s $28.7 billion in annual revenue. The division has struggled in recent years as newsstand sales and spending on print advertising has shrunk. Layoffs of 6% of its workforce — around 500 employees — were announced in January.
The move is similar to News Corp.'s decision last year to divide its entertainment and publishing businesses into two companies. One casualty of the split was tablet-first publication The Daily, which ceased publication at the end of last year.
Reports that Time Warner was looking to either sell or spin off Time Inc. were first reported by Fortune, which is owned by Time Inc., in mid-February. A buyer for the division (Des Moines-based publisher Meredith Corp) and a price ($1.75 billion) were quickly identified, but talks of a deal fell through Wednesday, the New York Times reported.
According to the Times, the deal fell apart because Meredith, which caters largely to the women's lifestyle market, wanted only 17 of Time Inc.'s 21 titles. If the original deal had gone through, Time Warner would have been left with its four news magazines (Time, Sports Illustrated, Fortune and Money), titles Meredith executives expressed little interest in.
"Time Warner executives walked away, believing they can find a better option, either by spinning off all 21 magazines without a partner or by keeping them while they look for another deal," the Times wrote.
Time Warner wasted little time in deciding on the former option. The company expects to complete the spin-off later this year.
Image via Mario Tama/Getty Images
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