It’s been a year since Meredith Corp. acquired Time Inc. and while the latter no longer exists, the former is pleased with how things have turned out.
In a memo to staff, Tom Harty, who has also been chief executive officer for about a year, boasted that Meredith’s much expanded portfolio now counts roughly 45 million subscriptions and drives around $500 million in annual retail sales for advertisers through affiliate marketing and e-commerce deals, as well as through Meredith’s own brand licensing efforts.
Consumer-driven revenue and e-commerce now apparently account for half of Meredith’s business, as Harty noted advertising generates “approximately half” of Meredith’s annual revenue. Many other publishers, legacy and digital alike, are still working to cut ad-dependent revenue down from the current range of 60 percent to 70 percent, if not more.
E-commerce and licensing efforts include former Time Inc. brands like People, InStyle, Travel + Leisure and Food & Wine. But titles like Time, Fortune, Money and Sports Illustrated were quickly put up for sale after the acquisition. Only the first two have found buyers, with the latter two apparently struggling to find their own and falling well outside Meredith’s initial late fall timeline to have all of them married off.
As for why Meredith decided to sell off some of Time’s more iconic titles, Harty wrote simply: “These brands and businesses have different target audiences and advertising bases than the rest of our portfolio and we know they will continue to thrive with their new owners.”
While a deal for Sports Illustrated has been expected for several months, none has yet materialized. There has been plenty of speculation regarding the price, with Meredith said to have been initially seeking around $200 million, which is thought to have come down to around $150 million, the same price fetched for Fortune and much less than for Time. Money magazine, however, is proving to be something of a leftover.
Chatchaval Jiaravanon, the billionaire who acquired Fortune, is said to have been looking at buying Money as well, but ultimately decided not to, despite the magazine being valued at most at $15 million. All told, Meredith was initially hoping to get about $500 million from the sales, and will probably pull in somewhere around that figure. However much it gets, the publisher intends to use the cash to pay down its debt by $1 billion this year. For the year ended September, the company’s total liabilities stood at $4.8 billion, according to data from S&P Capital IQ.
Part of the reduction will also come through a major cost-cutting effort that started almost as soon as Meredith took over Time Inc., with plans to cut around 1,200 positions (some via the sales, some not) that would result in between $400 million and $500 million in “synergies.”
But the cuts have actually exceeded even the high end of that plan. Harty wrote the company is “on pace” to realize $550 million in total synergies.
For those employees left, Harty wrote: “As you know, acquisitions require hard work and commitment and we can’t thank you enough for your focus, enthusiasm and collaboration.”
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