Sports Illustrated could be for sale after Time inc. deal closes
One of the best-known titles in the magazine world could soon be put on the block.
Sports Illustrated, whose annual swimsuit issue makes headlines — and waves — around the world, was among several Time Inc. titles that could be sold in early 2018 once Meredith Corp. closes on its purchase of Time Inc., according to widespread speculation.
Meredith Chief Executive Steve Lacy on Monday was playing his cards close to his vest — not ruling out that some titles may be sold.
A review of each magazine’s ad sales and digital prowess are likely to sway Lacy’s decision.
Meredith announced late Sunday that it was buying the iconic New York publisher for $18.50 a share — or $2.8 billion, including debt.
While Time Inc. had announced its intention to sell a handful of lesser-known assets — its Golf, Essence and Sunset magazines and its UK operation — Meredith will add Time, People, SI, Food & Wine, Fortune, InStyle and others when the deal closes in the first quarter of 2018.
“We’ll make some very informed decisions and move forward, but none of those decisions have been made today,” Lacy told a group of Wall Street analysts on Monday morning. “We’ll evaluate the whole portfolio going forward.”
The one Time Inc. title that Lacy did express great enthusiasm for keeping was People.
“A very significant portion of revenue and profit of Time Inc. comes from People,” said Lacy. He said that People’s ad revenue dip of 3 percent over the past 12 months was a better performance than the magazine publishing industry overall and better than Meredith’s overall performance.
Meanwhile, Time Inc. staffers are bracing for a bloodbath — starting with Chief Executive Rich Battista, who is expected to leave the company when the deal closes.
Meredith — whose bread and butter is women- and family-focused titles like Better Homes & Gardens and Martha Stewart Living — is promising $400 million to $500 million in cost synergies” over the first two years of the combination.
“To get anywhere near this [cost saving, a couple of thousand Time Inc. jobs surely have to go,” said one industry observer. “Just before the holidays, people have to be panicked.”
Wall Street seemed to like the deal as Meredith shares spiked 11 percent on Monday, to $67.55, after hitting a 52-week high earlier in the day. Time Inc. shares closed at the sale price of $18.50, up 9.5 percent.
Lacy said that Charles and David Koch, the billionaire brothers who are supplying $650 million in preferred share financing for the deal through their Koch Equity Development fund, did not demand a seat on the board and would not be involved in editorial.
The Koch brothers will get an 8 ¹/₂ percent coupon on their investment — along with “some equity upside,” according to Lacy.
Meredith had tried to buy Time Inc. twice before — the most recent effort coming earlier this year — but was having trouble raising the financing.
Several potential partners approached Meredith seeking to join a joint venture — but were turned aside by Lacy.
“In all sincerity, we were not looking for a lot of help running the business, so that eliminated a number of players who came around the table,” the CEO said.