Why Time Warner is spinning off magazine unit
Spinning off its magazine company into a separate entity will give Time Warner freedom to focus on TV and movies, explained the company's CEO in a statement released Wednesday. Shareholders have urged the move as increasing internet advertising challenged the magazine business in recent years.
Time Warner Inc. said Wednesday that it will spin off the magazine unit behind Time, Sports Illustrated and People into a separate, publicly traded company by the end of the year, ending a media marriage that has lasted more than two decades.Skip to next paragraph
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CEO Jeff Bewkes said in a statement Wednesday that the decision to split off the Time Inc. magazine company will give Time Warner "strategic clarity" and enable it to focus on its TV networks including TNT, HBO and CNN, and its Warner Bros. studio, which produces movies and TV shows.
He said the move would create value for shareholders, similar to the company's previous spin-offs of Time Warner Cable and AOL.
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In recent weeks, Time Warner had been in talks to combine all of Meredith Corp.'s magazines with Time Inc.'s lifestyle titles such as People, InStyle and Real Simple. But talks broke down over a value for the combined company and over which magazines from Time Inc. would be included in the mix, according to a person familiar with the matter. The person was not authorized to speak publicly and spoke on condition of anonymity.
Meredith said Wednesday that it respected Time Warner's decision and hoped to work with it on future opportunities. Des Moines, Iowa-based Meredith publishes magazines aimed at women such as Better Homes and Gardens, Fitness and Family Circle.
Time Warner shares rose 79 cents to $56.24 in after-hours trading following the announcement, after closing up 41 cents at $55.46. Shares of Meredith fell 80 cents, or 2 percent, to $39.50 after-hours. It closed down 86 cents at $40.30 in the regular session.
Analysts have estimated that the Time Inc. division is worth around $2.5 billion.
Time Warner said the spin-off would be tax-free to its shareholders.