In a note to its staff members on Sunday night, Rich Battista, the chief executive of Time Inc., said, he believed in “our strategic transformation plan and in our ability to write the next great chapter of this storied company.”
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“That said, as a publicly traded company, and one operating in such a dynamic industry as media, we know circumstances can change quickly,” he said. Meredith, Mr. Battista added, “presented us with an opportunity to combine companies to create even greater scale and financial flexibility.”
Under the terms of the deal, Meredith will pay $18.50 a share for Time Inc. The boards of both companies finalized the deal on Sunday evening. The deal is expected to close in the first quarter of 2018.
The investment from the Kochs, Meredith said, “underscores a strong belief in Meredith’s strength as a business operator, its strategies and its ability to unlock significant value from the Time Inc. acquisition.”
Some Koch allies have suggested that the brothers would view their investment purely as a moneymaking opportunity. But others familiar with the Kochs’ thinking speculated that they intend to use the media properties — which reach millions of online and print readers — to promote their brand of conservatism. The investment would also give the Kochs a way to combine the arsenal of voter information held by a data analytics company controlled by their network, i360, with the publishers’ consumer data.
Meredith is in some ways the opposite of Time Inc.
Its popular magazines are focused on families and women and are aimed more at Middle America than focused on politics, current events, business, sports and celebrity. Rather than an expensive headquarters in Manhattan, Meredith occupies a campus in Des Moines, Iowa. That, along with its diversified portfolio — the company also owns local television stations — has allowed Meredith to weather the economic storm fairly well.
The sale of Time Inc. almost certainly signifies coming changes at the celebrated magazine publisher founded by Henry R. Luce and Briton Hadden in 1922.
In those days, Time Inc. was an innovative company. Its flagship, Time, reported the news in a crisp, punchy style that suited an increasingly hectic and urbanized world. Time Inc. later started a business magazine, Fortune, and a general interest magazine, Life, which was known for its photography. It even had its own film arm, with “The March of Time” series of news shorts that played in movie theaters before the main feature.
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In recent years, however, it failed to keep pace as the media environment grew increasingly inhospitable for magazine publishers, which have crumbled under the pressure of declines in print advertising and circulation. Rodale, the publisher of Men’s Health and Runner’s World, recently announced that it had sold itself to Hearst, which owns Cosmopolitan and Esquire. Rolling Stone, once considered a counterculture bible, is exploring a sale. In July, Emerson Collective, the organization founded by Laurene Powell Jobs, took a majority stake in The Atlantic.
For Meredith, the acquisition of Time Inc. represents a long-elusive victory. A deal between the two publishers fell apart in 2013 after Meredith reportedly said that it did not want to acquire some of Time Inc.’s best-known titles, including Time, Fortune and Sports Illustrated. Meredith also expressed interest in buying Time Inc. earlier this year before it walked away — in part because it could not secure sufficient financing. (Time Inc. subsequently said it had decided not to sell itself.)
Adding Time Inc.’s portfolio will give Meredith even more national scale, which will help it continue to appeal to advertisers on both the print and digital sides. But the company will also have to adjust to printing weekly titles, which it currently does not do. Meredith said it expected its deal for Time Inc. would result in $400 million to $500 million in cost savings in its first two years.
Time Inc.’s story has not been as rosy. After Time Warner, the home of HBO and Warner Bros., spun off Time Inc. in 2014, the publisher was left to fend for itself in a world increasingly turning its back on print media. Bedeviled by relentless cost cuts and executive turnover, the company has struggled to articulate a business strategy less focused on the printed page.
Mr. Battista, who was named Time Inc.’s chief executive last year, and the new chief operating officer, Jen Wong, embarked on an aggressive strategy to increase digital revenue, including enhancing advertising technology capabilities and offering customers paid services, such as insurance for pets and a food and wine club. The company had also earmarked $400 million in cost cuts.
Time Inc. executives had been adamant that their stand-alone strategy could position the company for a successful future. But in an industry that increasingly values size and breadth, Time Inc. was staring into ongoing uncertainty. For its most recent quarter, it reported a 9 percent drop in total revenue compared with the same period last year, and a 12 percent decrease in advertising revenue.
Mr. Battista is expected to stay on at Time Inc. through the close of the deal, after which he will leave the company.
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