Koch brothers firm's investment in 'Time' raises questions of editorial independence

Media company Meredith Corp. is finally adding Time magazine to its magazine portfolio, but a major investment from the Koch brothers has some media critics wondering how their conservative leanings might affect the magazines' content.

Des Moines, Iowa-based Meredith, which publishes Better Homes & Gardens, is paying $1.84 billion in cash for Time Inc., which also owns Fortune, People and Sports Illustrated. Meredith, which two times previously tried to buy Time, is also refinancing $900 million of Time's debt for a value of $2.8 billion.

Some of the outlay comes courtesy of a $650 million investment from Koch Equity Development, part of the Wichita, Kan.-based conglomerate Koch Industries, controlled by Charles and David Koch.

The brothers are well known for their generous support of conservative causes and political candidates — a fact that has some media observers questioning whether the Kochs plan to exert editorial influence over the news magazine that has occasionally been at odds with President Trump.

"Nobody, but nobody, buys news media properties *unless* it is to exercise some influence through or over them...not least because it usually makes little economic sense otherwise," tweeted Emily Bell, the founding director of the Tow Center for Digital Journalism at Columbia's Graduate School of Journalism, after the deal was announced.

Meredith CEO and Chairman Steve Lacy said Koch Equity Development did not require a board seat for its $650 million investment. "Their desire to be passive," he said, "made the offer ... the most attractive."

Koch Equity Development additionally won't take part in editorial decisions, Meredith says.

The company expects the deal to close during the first quarter of 2018. Boards of both companies unanimously approved the deal, but it requires approval of a majority of Time Inc. shareholders and the Justice Department's antitrust division.

Deep-pocketed investors don't necessarily push their message through media properties they own or invest in. Warren Buffett's holdings at Berkshire Hathaway include the Omaha World-Herald and dozens of other local newspapers. And The New York Times noted that Mexican telecom tycoon Carlos Slim is the company's single largest stake-holder, and he has not influenced editorial policy, publisher Arthur Sulzberger Jr. told The Wall Street Journal last year.

But the media landscape could be shifting. Liberal groups, Democratic lawmakers and four state attorneys general have opposed an acquisition by the nation's largest broadcaster Sinclair Broadcast Group, which is seeking to grow to more than 230 local TV stations in its merger with Tribune Media Co.

While some critics simply argue that the merger puts too much nationwide power in the hands of one broadcaster, others raise concern that Sinclair requires stations to broadcast "must run" national editorials with a political bent. Sinclair "comes with an ideology that is far more focused on conservative points of view than any sense of balance or any deep-dive journalism," Michael Copps, a former FCC commissioner and special adviser to Common Cause, said recently.

The Federal Communications Commission has taken steps to allow for broadcasters to own more local TV stations, including more TV stations in a market, as well a station and newspaper in the same market.

"It’s a new terrain," said Ken Doctor, an analyst who writes about the media business on his website, Newsonomics.com.

"It looks to me like certain political interests are waking up to fact that it's going to be easier ... to own media and to tilt media in the directions they want," Doctor said.

Two former Time Inc. editors expressed doubt that the Koch brothers would steer clear of editorial involvement.

"Even though they won't have a seat on the board, hard to imagine they won't influence the editorial side," tweeted Richard Stengel, who served as managing editor 2006-2013.

Former Time Inc. editor-in-chief John Huey concurred in a comment posted by Politico senior media reporter Michael Calderone: "It’s difficult to believe the Kochs would pay a premium to buy into the print media model without the hope that they can harness Time and Fortune to further their agenda."

Asked about whether Koch would not get involved in Meredith's operations, Koch spokesman Rob Carlton reiterated the investment is "passive."

More: Koch brothers reportedly lend Meredith Corp. a hand in Time Inc. bid

It's not the Koch brothers' first attempt at media ownership. Four years ago, they attempted to acquire Tribune Publishing, which includes eight daily newspapers including the Los Angeles Times and Chicago Tribune. At the time, there were protests by union members, environmentalists and journalists about the brothers' potential for using the media outlets to spread their political viewpoint. In the end, they concluded the deal wasn't financially viable.

Time Inc. had spent several months earlier this year talking to suitors as it struggled with declining print advertising and circulation revenues at its national magazines.

In April, the New York City-based company announced it would not accept offers to sell from several bidders including Meredith. Meredith also reportedly sought to merge four years ago with Time. This latest investment came with the additional boost of the Koch Bros.

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"Meredith presented us with an opportunity to combine companies to create even greater scale and financial flexibility," Time Inc. President and CEO Rich Battista said in a Sunday night memo to employees, provided to USA TODAY. "Scale matters and will enable the enterprise to compete more effectively in this dynamic media landscape."

Time Inc. (TIME) on Monday shares rose 9.5% to $18.50, while Meredith (MDP) shares were up 10.7% to $67.55.

Meredith says the deal makes business sense because it stands to become a larger digital advertising and circulation presence. Its current stable of magazines includes Family Circle, Martha Stewart Living and Shape and the company owns 17 TV stations.

Combined, the companies create a Top 10 digital property with 170 million monthly unique visitors (Time Inc. had 140 million); the two companies would have generated $700 million in digital advertising revenue in 2016.

Meredith's collective national media audience of 200 million, would include 85% of millennial women, the company says.

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Follow USA TODAY reporter Mike Snider on Twitter: @MikeSnider.