Time Warner spinning off Time Inc. magazines

Roger Yu, USA TODAY | USATODAY

Time Warner is getting out of the magazine business.

The media conglomerate said Wednesday that it'll spin off its publishing division, Time Inc., as an independent, publicly traded company later this year. It also ended talks to sell several magazine titles to Meredith.

The spinoff follows an announcement by News Corp. to separate its entertainment and publishing businesses into two companies, a move that will be completed later this year.

"After a thorough review of options, we believe that a separation will better position both Time Warner and Time Inc.," said Time Warner CEO Jeff Bewkes in a statement. "A complete spinoff of Time Inc. provides strategic clarity for Time Warner Inc., enabling us to focus entirely on our television networks and film and TV production businesses, and improves our growth profile."

Time Inc. will benefit from "the flexibility and focus" of being a stand-alone public company, Bewkes said.

Laura Lang, CEO of Time Inc., will leave the company after the spinoff.

Meredith, based in Des Moines, had been in talks to buy several magazines that are largely aimed at women, including People, InStyle and Real Simple. Meredith CEO Stephen Lacy confirmed Wednesday that the talks are over for now.

"At Time Warner's initiation, we discussed combining our National Media Group with certain Time Inc. brands to create a new publicly traded company," he said in a statement. "We ... remain open to continuing a dialogue on how our companies might work together on future opportunities."

Time Warner has spun off other units before. In 2009, its cable telecommunications division began trading publicly as a separate company, now called Time Warner Cable. AOL, an online news and information company, was also spun off in 2009.

The publishing division, which makes up about 12% of Time Warner's revenue, has been a clear laggard, with declining sales at newsstands and sluggish ad revenue. The 2012 revenue for the publishing business — which consists mostly of Time Inc.'s magazines, related websites, book publishing and marketing businesses — fell 6.5% to $3.4 billion. Its operating income fell to $420 million from $563 million in 2011.

Still, its magazine titles are considered some of the most iconic publishing brands and account for a significant chunk of the U.S. magazine market. In 2012, Time Inc.'s U.S. magazines accounted for 21.5% of total U.S. advertising revenue in consumer magazines, excluding newspaper supplements, according to Publishers Information Bureau data published in Time Warner's latest annual report.

People, Sports Illustrated and InStyle were ranked Nos. 1, 3 and 5, respectively, in ad revenue in 2012, it says. Time Inc. had six of the top 25 magazines based on that measure.

Time Inc. hired Lang last year to oversee a strategic turnaround to focus more on digital properties. She also oversaw a move to lay off about 6% of its workforce earlier this year.

"After considerable thought, I have decided that taking the company through a transition to the public markets is not where my passion lies," Lang wrote to her staff Wednesday.