Meredith Reported to Be Chief Time Inc. Suitor

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UPDATED: 6:55 p.m. ET

Time Warner is discussing a potential sale of most of its fabled Time Inc. magazine portfolio to Meredith Corp., according to numerous published reports.

Following an initial revelation Wednesday of talks with an unnamed suitor in Time-owned Fortune magazine, an array of follow-ups pinpointed Meredith as the would-be buyer in a deal for the entire stable except for TimeSports Illustrated and Fortune. The sale would be mildly surprising given the rich legacy of print at the company, but also very much in keeping with CEO Jeff Bewkes’ relentless drive to shed tech, music, book publishing and cable system holdings in recent years.

Fortune’s account, like all others, cited unnamed sources, adding the caveat that a potential deal “is still in a formative stage and may never come to fruition.” A Time Warner spokesperson said the company “never comments on speculations.”

For Meredith, an acquisition would run somewhere in the neighborhood of $2 billion but would give the company unmatched breadth in print, which would be attractive to advertisers. Founded in 1902, Meredith operates such mainstays as Better Homes & Gardens and Ladies’ Home Journal - its portfolio’s female skew would be further enhanced by Time titles such as PeopleReal Simple and InStyle.

While the company does own a dozen TV stations in major markets such as Phoenix and Atlanta, the fit would be most apparent on the print side. Not to be discounted, however, is the nationally syndicated show Better, which has thrown off significant cash for Meredith and could serve as a model for similar magazine-derived offerings.

After a bumpy start to the decade, times have improved for the refocused, content-oriented Time Warner as profit engines at Warner Bros. Television have kicked into high gear. In recent weeks, it has reported strong quarterly earnings, seen its stock hit new highs and anointed a new CEO of Warner Bros., Kevin Tsujihara.

While Bewkes has thrown a few public bones to Time Inc. and often denied any interest in selling print assets, the unit’s revenue slipped nearly 7% last year to $3.4 billion, accounting for just 12% of Time Warner’s overall annual revenue. Like print rivals, it has faced an ongoing struggle to shore up advertising revenue and convert print audiences in an online and increasingly mobile marketplace. It plans to lay off nearly 500 staffers, or 6% of its total workforce, later this year.

It wasn’t immediately clear, despite the legacy value of the TimeFortune and S.I. brands, what Time Warner’s strategy would be if it kept those three titles in the fold. Notably absent from the lifeboat are consumer entertainment brands People - for more than a decade the company’s big earner and beacon of hope — and Entertainment Weekly. The best explanation for all the divvying-up would be straight financials - at a market capitalization of $1.7 billion, Meredith isn’t big enough to purchase all of Time Inc. outright. Various structural avenues are therefore being explored to allow Meredith operational control while alleviating some of its up-front costs.

Time Inc., founded in 1922, rose to an elite position in U.S. media in the post-World War II years, occupying the Modernist classic Time-Life skyscraper along New York’s Avenue of the Americas and dominating the public discourse. By the end of the 20th century, though, a secular shift away from print and fierce online competition had significantly eroded its position. The unit has gradually sold off smaller titles in recent years and now operates a total of 21 magazines and 25 websites.

Wall Street appeared to like the day’s news, sending Time Warner shares up two-thirds of a percentage point to $52.85 a share in above-average trading volume. Meredith shares lost a nickel to end at $37.98.

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