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$1.8 Billion To Be Expended By Meredith To Buy Time Inc.

$1.8 Billion To Be Expended By Meredith To Buy Time Inc.
An all cash deal worth $1.84 billion and backed by conservative billionaire brothers Charles and David Koch has been set for the purchase of Time Inc, the publisher of People, Sports Illustrated and Fortune magazines, by the U.S. media company Meredith.
On two earlier occasions, one earlier this year and another in 2013, Meredith, had been unsuccessful in buying out Time.
The Des Moines which is an Iowa-based publisher and broadcaster and the owner of lifestyle magazines like Better Homes & Gardens and Family Circle will now possess news, business and sports brands. Meredith might be able to create a separate publishing company by the scale that the deal would present it with through the bulking up on publishing assets, analysts have said.
With a paid circulation of nearly 60 million and a total readership of more than 135 million, the media assets of the combined company would be quite significant. The digital media business, after combination will have a total monthly unique visitors in the United States of 170 million and annual video views of 10 billion, which will enhance Meredith‘s reach with internet-savvy millennials.
Just in the first tow years of combined operations the new entity would be able to achieve an anticipated cost savings of $400 million to $500 million due to the eliminating of the overlap in the two companies, Meredith said. Time was valued at $2.8 billion including debt.
“We are adding the rich content-creation capabilities of some of the media industry’s strongest national brands to a powerful local television business that is generating record earnings, offering advertisers and marketers unparalleled reach to American adults,” Meredith Chief Executive Stephen Lacy said in the statement.
Meredith is anticipating an increase in ongoing annual dividends and will continue with the current annual dividend of $2.08 per share.
In June of 2014, Time was spun off as a standalone company by Time Warner Inc. but due to shrinking circulations and shifting of advertisements to the digital media, the New York-based Time has found it hard since its inception to cope up with the decline in the print media itself.
Revamping of the cost structure at Time and the shifting of focus on digital media was underway at the publishing house under CEO Rich Battista. At the same time, the company had been looking out at avenues of a sale for a number of titles of its magazines like the Coastal Living, Sunset and Golf, as well as a majority stake in Essence and Time Inc UK.
The company has said that about $488 million in revenues was expected form the sale of those assets for the year ended June 30.
It has been several years that there has been an ongoing consolidation in the magazine industry. last month, Rodale, the publisher of Men’s Health magazine announced that it was selling itself off to larger rival Hearst. A sale of the music magazine – Rolling Stone, was being explored by its publisher Wenner Media, the company said in September.

Christopher J. Mitchell

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