(Photo by Ben Gabbe/Getty)
One of the country’s best-known media properties is heading out on its own.
Time Inc., the largest publisher of consumer magazines in the U.S., was formally spun off Monday as a stand-alone publicly traded company. And with Cravath, Swaine & Moore advising longtime client Time Warner on the historic move, which saddles Time Inc. with $1.3 billion in debt, the latter has turned to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo for outside counsel on the split from its former parent.
Mintz Levin’s role on the spinoff follows the firm’s work advising Time Inc. on its purchase last week of Seattle-based mobile application maker Cozi for an undisclosed sum. Kenneth Koch, a corporate partner with the firm in New York who took the lead on the spinoff for his firm, says the publisher’s acquisition of Cozi—which was founded in 2005 by a former Microsoft executive and whose app is geared toward helping families organize their time and activities—is yet another sign of the changes buffeting the media industry.
But for Time Inc.—whose titles include Fortune, People, Sports Illustrated and Time—nothing exemplifies the shifting nature of the media landscape more than its own transformation into a freestanding entity. As of Monday, it is the only major U.S. company focused solely on magazine publishing. Rather than raising capital by selling stock through an initial public offering, Koch says the company achieved its independence by distributing shares to current Time Warner stockholders.
Time Inc. CEO Joseph Ripp—who got the top job last year after the company broke off merger talks with rival Meredith Corp.—marked the new era by ringing the New York Stock Exchange’s opening bell and making the rounds on the morning business media TV shows. The promotional push notwithstanding, the price of the newly issued Time Inc. shares slumped in trading Monday.
As a largely print-focused media company, Time Inc. faces serious challenges as it tries to shift its emphasis toward digital publishing in search of young, Web-savvy readers, according to reports by both Bloomberg and The New York Times, the latter of which noted that one way the company may cope with those challenges is by cutting its editorial budget by up to 25 percent.
Time Warner began to lay the groundwork for Monday’s spinoff last year, retaining Cravath corporate partners Richard Hall in London and Eric Schiele in New York to advise on the process, according to our previous reports. Time Warner itself was formed in 1989 through the $15.2 billion merger between Time Inc. and Warner Communications. (In a precursor to Monday’s transaction, Time Warner spun off its Time Warner Cable unit in a $9.25 billion deal in 2008. Time Warner Cable, the nation’s second-largest cable company, is now the target of a massive takeover bid by larger rival Comcast.)
While it prepared to go solo over the past several months, Time Inc. shook up its upper management ranks. As part of that effort, former editor-in-chief Norman Pearlstine rejoined the company as chief content officer last fall even as Time Inc. altered its long-standing editorial policy by directing editors of individual publications to report to business-side executives.
Time Inc.’s in-house legal department got its own makeover around the same time, according to sibling publication Corporate Counsel, which reported on the company’s hire of former News Corp. legal chief Lawrence “Lon” Jacobs to serve as general counsel. Jacobs replaced Maurice Edelson, who is now Time Warner’s deputy general counsel.
Time Inc. is one of several media companies undergoing changes of one kind or another in recent weeks.
ALM Media Properties, parent company and publisher of The Am Law Daily, was sold last week for $417 million to former owner Wasserstein & Co., which sold the legal publishing giant for $630 million just seven years ago.
And last month Gannett & Co., the nation’s largest newspaper publisher, paid $215 million for a portfolio of six television stations in Texas owned by London Broadcasting, a portfolio company of Akin Gump Strauss Hauer & Feld private equity client SunTx Capital Partners. (Akin Gump alum Barrett Bruce serves as legal and chief compliance officer for SunTx Capital.)
The deal was Gannett’s latest TV purchase, coming almost a year after the McLean, Va.-based company tapped Nixon Peabody and Paul Hastings to advise on its $1.5 billion acquisition of TV station operator Belo Corp. Reuters reported last week that with Time Warner spinning off its publishing arm, Gannett could unlock additional shareholder value by pursuing a similar strategy.