TIME Warner Inc will spin off its magazine business later this year, turning the nine-decade-old publisher of Time, People and Sports Illustrated into a separate publicly held company.
The board authorised management to proceed with the plan after a review of options, the New York-based media company said yesterday in a statement. As part of the move, Time Inc chief executive Laura Lang will step down from the role.
"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," Jeff Bewkes, CEO of the parent company, said.
"Time Inc will also benefit from the flexibility and focus of being a stand-alone public company and will now be able to attract a more natural stockholder base."
The move represents Time Warner's third major spinoff since Bewkes became CEO in 2008, letting the company focus on faster- growing businesses.
Time Warner Cable Inc became independent in March 2009. Time Warner spun off AOL, the dial-up Internet service that is remaking itself as a Web publisher, later that year.
Time Warner's magazine assets could be worth as much as US$3.2 billion (RM9.94 billion), based on estimates published last month by John Janedis, an analyst at UBS AG in New York.
The spinoff decision follows an attempt to divest some of Time Warner's magazines to Meredith Corp, the Iowa- based publisher of Better Homes and Gardens.
Shares of Time Warner rose 1.4 per cent to US$56.25 in extended trading after the announcement. Meanwhile, Meredith's stock depreciated by two per cent to US$39.50.
Meredith said yesterday it remains open to talks.
"There are natural synergies between our two portfolios; however, we respect Time Warner's decision and certainly remain open to continuing a dialogue on how our companies might work together on future opportunities," Meredith chief Stephen Lacy said.
Time Inc has posted sales declines in five of the last seven years, making it the biggest laggard among the company's divisions. Revenue fell 6.6 per cent to US$3.44 billion last year, reflecting broader declines across the US magazine industry.
The Time Inc spinoff would rid Time Warner of its original business, ending its long history in magazine publishing. Bloomberg