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Time Inc is poised to sell itself to rival media group Meredith in a near-$2bn deal backed by the Koch brothers, giving the conservative billionaires a stake in one of America’s best-known publishers.
People briefed on the deal talks said on Sunday evening that an agreement valuing Time Inc’s shares at about $18.50 could be announced as early as Monday morning in New York.
The Koch brothers, who are providing about $600m in financing for the deal together with several large global banks, will end up controlling about 10 per cent of Time Inc.
It is Meredith’s third run at the 94-year-old company, which publishes Time, People and Sports Illustrated magazines.
Time Inc has been trying to transform itself from a print to a digital media business in the face of successive years of declining revenues but has been shackled with a $1.2bn long-term debt burden.
The company has been making sweeping cost cuts, eliminating 300 jobs, cutting back the circulation and frequency of some of its best-known magazines, and attempting to sell its UK magazines division.
Time Inc declined to comment. Meredith and a representative for Charles and David Koch did not respond to request for comment.
The Koch brothers, who have a net worth of $48.2bn each, according to Forbes, control Koch Industries, the US’s second-largest private company. They have used their wealth to champion free-market causes, including corporate tax cuts and deregulation. A previous foray into media fizzled: in 2013, they explored buying eight regional newspapers owned by the Tribune Company (now known as Tronc), including the Los Angeles Times and Chicago Tribune, but ultimately decided against a bid.
Iowa-based Meredith publishes monthly magazines aimed at women, including Better Homes & Gardens, Martha Stewart Living and Family Circle, and has long coveted Time titles such as People and InStyle. It has tried and failed to reach a deal twice before. In 2013, talks with Time Warner, which then owned Time Inc, fell apart and the publisher was spun off as an independent company.
Net worth of each of the Koch brothers
Earlier this year Meredith renewed its overtures after Time Inc hired bankers to field interest in the wake of an unsolicited bid from an investment group backed by Len Blavatnik, the billionaire owner of Warner Music Group, and Edgar Bronfman Jr, Warner Music’s former chief executive. Meredith was unwilling at the time to pay what Time was seeking and had difficulty arranging financing, according to a person familiar with the matter. Time Inc eventually said it would not sell itself.
Time Inc’s 3½-year run as a standalone publisher has been rocky. It has been hard hit by the erosion of print and has not recorded revenue growth over the past six years. A strategic reorganisation aimed at growing digital revenues and reaching a wider audience has shown some progress, but has been overshadowed by the woes of its traditional magazine business, where revenues have dropped 14 per cent from a year ago.
Few in the magazine industry have been spared the downturn in print and difficulties of building a sustainable digital business. Condé Nast, the owner of Vanity Fair and Vogue, is slashing budgets and staff; Vanity Fair’s new editor has been tasked with trimming its costs by 30 per cent. Rolling Stone, the iconic rock-and-roll magazine, is being sold by its founder.
Time Inc has put several titles on the block, including its entire UK magazines division, and plans to cut back the circulation and frequency of some of its best-known magazines, including Sports Illustrated, Entertainment Weekly and Fortune.
At the same time, the publisher has invested in digital media and consumer marketing, including advertising technology, video production deals and a subscription services for pet owners.