Time Inc. CEO Joe Ripp says he is “comfortable” with the $1.3 billion in debt load Time Warner CEO Jeff Bewkes will lay on the magazine giant when it is spun off as an independent company in the second quarter.
“Debt is good,” Ripp — sounding like the anti-Gordon Gecko — told about 300 top managers at Time Inc.’s quarterly managers meeting on Thursday. “It will keep private equity away.”
At the start of the spin-off, existing Time Warner shareholders will get stock in the new Time Inc.
Time Warner CFO Howard Averill, however, was tamping down expectations to those very shareholders only a few days earlier during the parent company’s talk to Wall Street analysts.
“Looking ahead to 2014, the operating environment remains challenging,” he said about Time Inc. “Excluding the impact of our acquisition of American Express Publishing Corp., we anticipate continued declines in advertising and circulation revenues.”
For 2013, Time Inc. had adjusted operating income of $404 million, down 13 percent, on a 2 percent drop in revenue to $3.4 billion.
The pow-wow with top managers came only two days after Ripp unveiled plans that will chop about 500 people, or 6 percent of the publishing giant’s work force.
Ripp is relying on advice from the management consulting firm Boston Consulting Group, sources said. He also revealed at the managers meeting that he will be on the move, according to a post first revealed by Adweek.com
Ripp is going to shut down the executive suite on the 34th floor of the Time & Life Building, which has been the corporate home since founder Henry Luce moved into the skyscraper on the edge of Rockefeller Center in the 1950s.
He and his top lieutenants including Chief Content Officer Norm Pearlstine and Jeff Bairstow, the chief financial officer, will be moving to what is now a conference room on the second floor.
Any move may be for only a couple of years, since Time Inc. is said to be looking at three sites downtown, as well as talking to Rockefeller Center regarding space when its current lease expires in 2017.
In the meantime, Travel & Leisure, Food & Wine and the rest of the AmEx Publishing titles acquired in October will be moving uptown into the Time & Life Building — a few blocks north of their current Sixth Avenue site. Ripp and associates are moving downstairs in March.