Time Warner Inc. (TWX:US) named Joseph Ripp chief executive officer of Time Inc., the magazine unit that will be spun off as a separate company later this year amid an industrywide decline in print advertising.
Ripp, 61, is the CEO of OneSource Information Services Inc., a provider of data on companies, and previously held a series of senior positions at Time Warner, including as chief financial officer when it was part of the much larger company that had merged with AOL Inc. He’ll begin his new role in September, the company said today in a statement.
“We have to reignite the spark at Time Inc.,” Ripp said in an interview. “There are lots of challenges, and we need to identify the things we need to stop doing and identify areas for growth.”
Time Warner CEO Jeff Bewkes decided earlier this year to cleave off the shrinking magazine business to focus on the company’s more valuable television and film divisions. The move mirrors plans by other major media companies. News Corp. split in two at the end of last month to form a separate newspaper business, and Tribune Co. (TRBAA:US) announced this month it would spin off its newspapers, which include the Los Angeles Times.
Time Inc.’s sales have fallen in five of the last seven years, making it the biggest laggard among Time Warner’s divisions. The unit’s revenue of $3.4 billion in 2012 represented more than 11 percent of Time Warner’s total sales, according to data compiled (TWX:US) by Bloomberg.
Time Warner rose less than 1 percent to $62.22 at the close in New York. The shares have gained 30 percent this year.
Ripp said the plan to make Time Inc. independent gives it more freedom to make investments and to more rapidly transform the business into digital publishing at a time when fewer people are reading print media.
“We’re no longer going to be the magazine division of Time Warner,” he said. “We’re not going to be a magazine company at all.”
Ripp, who left Time Warner in 2004, was named in a Securities and Exchange Commission investigation that alleged Ripp, along with seven other executives, had fraudulently overstated ad revenue at AOL.
While Ripp settled the claims for $150,000 in 2010, neither admitting nor denying the allegations, he was described as the “whistle-blower” in a New York Times article about the investigation.
“Joe Ripp is as far from being a crook as anyone you’ll ever know,” John Huey, then editor-in-chief of Time Inc., told the Times.
Time Warner announced its spinoff plans in March after talks fell apart for a joint venture with Meredith Corp. (MDP:US), publisher of primarily women’s titles such as Ladies’ Home Journal and Family Circle. The venture would have folded in Time Inc.’s women’s-focused magazines, such as InStyle and People, while leaving the news and sports titles such as Time and Sports Illustrated with Time Warner. The talks faltered after Bewkes decided he wanted to unload all 21 publications at once, a person familiar with the process said at the time.
Meredith CEO Stephen Lacy said then that the company remained open “to continuing a dialogue on how our companies might work together on future opportunities.”
While Ripp is open to talking to Lacy, it’s unlikely the two companies will enter into any merger discussions, the new Time Inc. CEO said today in the interview.
With analysts estimating an enterprise value of about $3.9 billion, Time Inc. would be bigger than any other publicly held company focused on magazine publishing after it separates from Time Warner, according to data compiled by Bloomberg.
As a public company, projections for Time Inc.’s enterprise value -- or the sum of its equity and debt minus cash -- range from $2.7 billion to about $4.9 billion, according to six analysts’ estimates compiled by Bloomberg. The average estimate of about $3.9 billion would outstrip Meredith’s enterprise value of $1.97 billion. About three-quarters of Meredith’s revenue comes from national magazines, with the remainder from local television stations.
Many of Time Inc.’s magazine rivals are closely held, including Advance Publications Inc., owner of Vogue and Vanity Fair publisher Conde Nast, and Hearst Corp., which publishes Cosmopolitan.
Time Warner executives are looking at starting Time Inc.’s debt at about three times its annual operating income, which would amount to about $1.2 billion, two people familiar with the discussions told Bloomberg News in March.
The Time Inc. spinoff would rid Time Warner of its original business, ending its long history in magazine publishing. Time Inc., which was founded by Henry Luce and Briton Hadden in 1922, became the foundation for Time Warner, one of the largest media companies in the world. After entering the television business, the company eventually acquired a controlling stake in movie studio Warner Communications in 1989 and became Time Warner the following year.
The separation of Time Inc. also marks Time Warner’s third major spinoff since Bewkes became CEO in 2008. Time Warner Cable Inc. (TWC:US), the second-largest U.S. cable company, became independent in March 2009, while AOL Inc. was spun off later that year.
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