Time Warner is in talks to sell off the bulk of its Time Inc. magazine business, and industry sources say all signs point to Meredith Corp. as the lead suitor.
Time Inc.-owned Fortune.com broke the story, saying only that a “serious suitor” was meeting with Time Warner executives today over a possible deal, which would not include Time magazine, Fortune and Sports Illustrated.
The rest of the mag empire is up for grabs, including the most profitable magazine in the country, People, along with women-centric titles In Style, Real Simple, Cooking Light, Sunset and Southern Living.
Reed Phillips, an investment banker at DeSilva + Phillips, said a logical buyer would be “a large publisher with a lot of women’s magazines in its portfolio.”
Meredith, which owns Better Homes & Gardens, Fitness and Family Circle, is seen as the most likely bidder. The company, which also owns TV stations, has been somewhat active on the acquisition front. It also needs a boost to keep pace with Hearst, which two years ago gobbled up Hachette Filipacchi Media.
Both Time Warner and Meredith declined to comment.
Hearst, which publishes Cosmopolitan, O, the Oprah Magazine and Good Housekeeping, and Condé Nast, with Vogue, Vanity Fair and the New Yorker, also have a number of women-targeted titles. But sources said neither company is in the hunt.
Phillips believed a deal for all Time titles would go for between $3.2 billion and $3.5 billion. Most sources say the declining health of print publishing would deter private-equity buyers.
Time Inc.’s profit last year was $420 million on revenue of $3.4 billion. Sports Illustrated is the second-most profitable title in the stable, so leaving that out of the mix would probably drop the price to below $3 billion.
The broker handling the deal for Time Warner is BDT Capital, headed by former Goldman Sachs banker Byron D. Trott, according to the Fortune report. Meredith worked with BDT Capital last year when it was acquiring website Allrecipes.com from Reader’s Digest Association .
Time Inc. recently announced it was cutting about 500 jobs, or 6 percent of its workforce.
Insiders have been complaining that CEO Laura Lang had failed in her first year in office to articulate a strategy to break it out of its publishing morass, with expectations that she would focus on the digital side. She was chief of digital ad agency Digitas before taking over at Time Inc. in January 2012. Complaints were said to have reached the ear of Jeff Bewkes, the CEO of Time Warner.
A meeting with a potential buyer is scheduled for today, the report said, adding that talks are still in formative stages.
A Time Warner spokesman said the company does not comment on speculation.
Time Inc is the publisher of magazine titles like People, Sports Illustrated, Fortune and its namesake news weekly.
In one possible outcome, the buyer would get most of Time Inc’s titles while Time Warner would retain three magazines: Time, Sports Illustrated and Fortune, the report said.
Magazines and newspapers are dealing with declining advertising revenue and readers who are increasingly choosing digital products over print.
In 2012, revenue at Time Inc dropped 7 percent to $3.4 billion on declines in advertising and subscription revenue. Operating income fell 25 percent for the same period.
Time Inc announced in January it planned to cut about 500 jobs, or about 6 percent of its workforce.