Starting Monday, investors finally have a way to invest in the future of magazines. The important question: will anyone want to?
Time Inc. begins trading on Monday as an independent company, having been spun off from its former parent company, Time Warner.
The near future for much of the company is uncertain, particularly after the New York Times reported that Chief Executive Joe Ripp is looking to make cuts that could end up totaling 25% of the editorial budget.
In February, news broke that Time Inc. would be laying off around 500 staffers. It was not immediately clear if the 25% would be in addition to those cuts. Time Inc did not respond to request for comment.
Time now becomes one of the purest publicly traded media companies. At a time when editorial operations are a break-even part of larger conglomerates, Time can now be looked to as the most high-profile proxy for the struggling magazine industry.
The company’s greatest strength is in the brand names that it will operate. Many of the most well known American magazine titles sit under the company’s umbrealla, including Sports Illustrated, Entertainment Weekly, InStyle, People, Fortune, and its namesake Time.
Financially, it will be off to a less-than-optimal start. Time will be saddled with $1.3 billion in debt, a hefty sum for a company that is expected to have a value of around $2.6 billion.
Debt is not a death knell for a company. Companies have been eager to taken on more debt recently thanks to interest rates that make it cheap to borrow large sums of money.
The more pressing issue is falling revenue. During its last few years as a division of Time Warner, the magazine business suffered from falling income that has cut even deeper into the company’s profits.
Time is not an anomaly when it comes to declining magazine income. Almost every metric of magazines has been in decline including total circulation, single copy sales and ad pages, according to data from the Alliance for Audited Media compiled by the Pew Research Center.
The best thing to be said about the numbers is that the decline has leveled off. Recent growth in advertising helped offset subscriber declines.
The company will look to its digital properties for growth. Among its assets is CNNMoney.com, a profitable site.
Time also recruited M. Scott Havens, formerly president of The Atlantic, to head up its digital side. Havens spoke with Mashable in February and said he would be pushing into programmatic advertising, a mostly automated process that has attracted advertisers seeking efficient ways to target people online.
Now out from under Time Warner, executives are starting to push new ideas. Time and Sports Illustrated are experimenting with small ads on the covers of its print magazines.