After struggling to adapt to the shift from print to digital publishing, Time Inc. has agreed to be sold to Meredith, the owner of Family Circle and other magazines, in a $2.8 billion deal backed by the Koch brothers.
Meredith, an Iowa-based company that has long focused on magazines aimed at families and women, would become the owner of a New York publishing icon responsible for such influential titles as Time, Fortune, and Sports Illustrated.
Time Inc. was spun off from Time Warner in 2014 but as The New York Times reports, it has “failed to keep pace as the industry-wide transformation from print to digital rendered old methods of magazine-making obsolete and publishing companies crumbled under the pressure of declines in print advertising and circulation.”
For its most recent quarter, it reported a 9% drop in total revenue compared with the same period last year, and a 12% decrease in advertising revenue.
Under the terms of the deal, Meredith will pay $18.50 a share for Time Inc. It has secured debt financing from lenders and a $650 million equity investment from Koch Equity Development.
“We are creating a premier media company serving nearly 200 million American consumers across industry-leading digital, television, print, video, mobile, and social platforms positioned for growth,” Meredith CEO Stephen M. Lacy said in a news release.
In a conference call with analysts Monday, Lacy insisted the Koch brothers, who are known for their advocacy of conservative causes, would not demand any control despite their hefty investment. He cited their “desire to be passive and not require a board seat.”
But former Time Inc. executives expressed alarm. “It’s difficult to believe the Kochs would pay a premium to buy into the print media model without the hope that they can harness Time and Fortune to further their agenda,” former editor-in-chief John Huey told Politico.
In addition to owning magazines, Meredith operates 17 television stations that reach more than 11% of U.S. TV households. The company believes the combined size of Meredith and Time will give it an advantage in attracting advertisers.