Time Spinoff Seen as Hunter or Prey With $3.9 Billion: Real M&A

The decline of magazine sales is nothing new, as people begin to switch to new forms of information that rely on new technologies. Due to these lagging sales, Time Warner Inc. is working to separate itself from its magazine and “create the world’s largest publicly traded magazine publisher,” Time Inc.

The uniqueness of this situation, however, is that there are many plans that Time Warner could choose to follow. Time Warner can acquire Meridith Corp., another magazine company based in Iowa, to reduce costs, or be acquired by private equity investors. In either case,  the move seems to have pleased the markets, as their stocks have seen an increase as result of Time Warner’s actions. It is even possible that only sections of the Time magazine will be sold out to Meredith in order to ease the cultural difference of topics between the companies of small-town Iowa and big-business New York.

I feel that the logic is sound for the separation of the businesses due to the size and difference of the media in play. The print industry requires a different type of focus than other modern media require, and separation can allow closer analysis to reduce costs and specify target audiences. The idea of private equity seems valid as well, in that Warren Buffett was recently touting investments into newspapers, which has seen a comparable decrease in sales.



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