Why Time Warner is spinning off magazine unit

Spinning off its magazine company into a separate entity will give Time Warner freedom to focus on TV and movies, explained the company's CEO in a statement released Wednesday. Shareholders have urged the move as increasing internet advertising challenged the magazine business in recent years.

By Ryan Nakashima,?Associated Press / March 6, 2013

This 2008 file photo shows President Barack Obama featured in a special issue of Time Magazine on a New York newsstand. Time Warner Inc. on Wednesday said that it will spin off the magazine unit into a separate, publicly traded company by the end of the year.

AP Photo/Mark Lennihan, File

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Time?Warner?Inc. said Wednesday that it will spin off the magazine unit behind?Time, Sports Illustrated and People into a separate, publicly traded company by the end of the year, ending a media marriage that has lasted more than two decades.

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CEO Jeff Bewkes said in a statement Wednesday that the decision to split off the?Time?Inc. magazine company will give?Time?Warner?"strategic clarity" and enable it to focus on its TV networks including TNT, HBO and CNN, and its?Warner?Bros. studio, which produces movies and TV shows.

He said the move would create value for shareholders, similar to the company's previous spin-offs of Time?Warner?Cable and AOL.

In recent weeks,?Time?Warner?had been in talks to combine all of Meredith Corp.'s magazines with?Time?Inc.'s lifestyle titles such as People, InStyle and Real Simple. But talks broke down over a value for the combined company and over which magazines from?Time?Inc. would be included in the mix, according to a person familiar with the matter. The person was not authorized to speak publicly and spoke on condition of anonymity.

Meredith said Wednesday that it respected?Time?Warner's?decision and hoped to work with it on future opportunities. Des Moines, Iowa-based Meredith publishes magazines aimed at women such as Better Homes and Gardens, Fitness and Family Circle.

Time?Warner?shares rose 79 cents to $56.24 in after-hours trading following the announcement, after closing up 41 cents at $55.46. Shares of Meredith fell 80 cents, or 2 percent, to $39.50 after-hours. It closed down 86 cents at $40.30 in the regular session.

Analysts have estimated that the?Time?Inc. division is worth around $2.5 billion.

Time?Warner?said the spin-off would be tax-free to its shareholders.

Source: http://rss.csmonitor.com/~r/feeds/csm/~3/hueY7JHiO6Q/Why-Time-Warner-is-spinning-off-magazine-unit

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