SI is down to just 38 issues this year

Good memory. Meredith has made a couple of offers over the last 5 years or so, but nothing ever got done. Last year, Time reportedly rejected an off from another group of investors that included Edgar Bronfman, and Meredith approached them afterward to see if they could come up with a better deal. Nothing happened.

I have no idea if Meredith is going to regret this. The $3 billion + of debt Meredith is taking on to make this work is a boat load of money. That kind of heavy debt financing often ends badly, but with the cost of financing so artificially low right now, even on risky deals, this is the type of thing you get. The plan is to merge into a behemoth that can take away some of the digital advertising Facebook and Google are controlling. What makes it really curious, is that it was only 3 years ago that Time was spun off from Time Warner because the ad sales model was falling apart quickly. Now, they are reversing course.

 

On a GAAP basis, Time Inc. hasn't been profitable for 2 or 3 years, and advertising overall for the print magazines has been declining quickly. It has been growing its non-print advertising, though, as it tries to hang in there. That is what this deal is about. Meredith wants size and scale. It could be as simple as trying to cut costs by getting rid of duplication, and then trying to integrate everything into enough eyeballs to take on Google and Facebook for some of the online ad revenue pie. Who knows if they'll be successful? As far as the print pieces go, the last time around that Meredith tied to buy Time Inc., it didn't even want Time, Fortune, Money or SI included in the deal. It wouldn't be surprising if Meredith shuts down Time all together; there are rumors already. Fortune and Money might be on the chopping block, too. They all lose money. In Style and Real Simple, on the other hand, could fit in with the publications Meredith already does in terms of marketing them. But really, as difficult as it is to hear (and say), the print pieces are largely dead weight. I am sure they are thinking digitally.