(Reuters) - U.S. media group Meredith Corp MDP.N has made a preliminary acquisition offer to Time Inc TIME.N that fell short of the price expectations of the publisher of Sports Illustrated and Fortune magazines, according to people familiar with the matter.

Slideshow ( 2 images )

The gap in valuation expectations could represent a setback to Time Inc’s efforts to sell itself. It comes after an investor group led by former music executive Edgar Bronfman Jr abandoned its pursuit of Time Inc in March, following a $1.8 billion offer it made late last year.

While Time Inc is looking to sell itself for more than $20 per share, Meredith has so far made a preliminary offer with a price range that values it below that, the people said this week. The exact price range that Meredith has offered could not be learned.

The sources cautioned that Time Inc is still willing to engage with Meredith in price negotiations, which have yet to kick off in earnest. Time Inc has also been pursuing offers from other parties in what is sees as a competitive sale process, according to the sources.

Time Inc shares dropped 4 percent to $18.20, giving the company a market capitalization of around $1.8 billion. Meredith shares were down 1.8 percent to $63.20, giving that company a market capitalization of $2.8 billion.

An investment group led by private equity firm Pamplona Capital Management LP remains interested in Time Inc, but it also considers it unlikely that it can meet its price expectations, according to the sources.

The sources asked not to be identified because the sale process is confidential. Time, Meredith and Pamplona declined to comment.

An acquisition of Time Inc would give Meredith the scale required to spin off its broadcasting arm into a standalone company. Many of Meredith's competitors, from Tronc Inc TRNC.O to Tribune Media Co TRCO.N, have shed their publishing operations following a drop in print advertising revenue.

Time Inc has been weighing a sale of the company for the past several months, amid a decline in earnings.

For the fourth quarter, the company reported lower-than-expected quarterly profit and revenue. Print ad revenue, which accounts for more than two-thirds of its total ad sales, fell 10.2 percent in the three months to Dec. 31, from a year earlier.

This would not be the first time that Meredith has come close to buying Time Inc. In 2013 Meredith and Time Inc’s owner at the time, Time Warner, were in talks about a deal for Time Inc but the discussions ended unsuccessfully. Time Warner then spun off Time Inc as a stand-alone company in 2014.

Time Inc has since made attempts to expand beyond its print roots by going on a shopping spree for digital media firms. It acquired Viant Technology, an advertising technology firm that owns Myspace, an early social media company.

Time Inc replaced its chief executive last year after activist hedge fund Jana Partners LLC unveiled a stake in the company. The deadline for any activist shareholder to put forward nominees to challenge the company’s board director picks is April 21.

Meredith tried to merge with Richmond, Virginia-based broadcaster Media General in 2015, but Nexstar Broadcasting Inc swooped in with a higher bid, acquiring Media General for $4.6 billion.