Magazine Media’s Dismal Record in Public Equity Markets

When Time Inc. declared it was putting the brakes on a potential sale, the announcement served — among other things — as a reminder that the public equity markets have not been kind to magazine media.

Time Inc. spun out from Time Warner in 2014, emerging as a standalone company with some of the most storied magazine brands in history, but also $1.3 billion in debt and a lengthening record of declining revenue. Last year was no exception, with revenue falling to just under $3.1 billion. In 2010, by contrast, the company’s revenue was $3.7 billion.

Time Inc.’s stock peaked at $25.62 just a month or so after the spinoff, and after a rally in early 2015, it’s never gotten close to that point again. It was trading at under $15 early this week.

The company’s three-year experiment with public equity markets has, by almost any objective measure, not succeeded. Ironically, at least according to one observer, being part of a public company — Time Warner — is what led to this outcome.

“The capitalist investors who owned shares in Time Warner did what all capitalists should do,” says Reed Phillips, CEO of the M&A brokerage DeSilva + Phillips. “They tactically influenced the management team to redeploy the cash generated by Time Inc. into more promising and higher-growth businesses that Time Warner also owned or wanted to acquire. If Time Inc. had been independent, it presumably would have used its profits to invest in opportunities that would have further developed and supported the magazine brands over the long term.”

Another observer with direct experience managing a publicly traded magazine company, Northstar Travel Group CEO Tom Kemp, notes that Time Inc.’s low share price is really just an indication of a deeper issue. “The problem with their valuation is that the revenues and gross profits continue to decline each year, and the market does not know when they will hit bottom,” he says. Kemp was CEO of Penton Media in the late 1990s and early 2000s.

Time Inc. is almost certainly the most prominent magazine company in U.S. media history, and clearly its challenges are contemporary, but it represents just the latest in a line of magazine-media companies whose experiences as public companies ended badly.

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