Time Inc. Plots a Future Beyond Its Heyday, as Suitors Line Up

http://www.nytimes.com/2017/03/05/business/media/time-inc-magazine-jen-wong-and-rich-battista.html

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Onstage at a recent industry conference with the longtime leaders of the country’s biggest magazine publishers, Rich Battista, the new chief executive of Time Inc., did not seem the outsider. Tieless, with legs crossed, he ticked off his company’s latest accomplishments — robust digital growth, updated advertising capabilities — with the swagger of a knowing publishing chieftain.

“There’s something really exciting happening at our company,” he said, echoing what had become something of a rallying cry at Time Inc. “We’re taking our brand to really exciting new places.”

A former television executive, Mr. Battista, 52, has been charged with revitalizing the most storied magazine publisher in the country. At the helm of the nearly century-old Time Inc. since September, he has quickly worked to transform the home of Time, People and Sports Illustrated into a multimedia, multipurpose company, with a strategy heavy on online video, television and entertainment — and noticeably lighter on magazine journalism. Among the ideas the company has floated: offering people paid services like a food-and-wine club and insurance for pets.

Mr. Battista’s zeal, however, may not be enough to save the Time empire, whose weekly publications helped propel the national conversation for decades but have struggled to maintain their relevance in the digital media environment.

Time Inc.’s revenue has fallen every year since 2011, and investors have punished its stock since the company was spun off from Time Warner nearly three years ago. Brutal cost cuts and relentless executive churn have roiled the company.

Smelling blood, potential acquirers have been circling the company for months. And while the board has not yet decided whether to pursue a sale, it has asked suitors to submit formal bids by this week, according to two people briefed on the company’s plans. Five parties, including Meredith Corporation and an investor group led by Edgar Bronfman Jr. and the media executive Ynon Kreiz, have expressed interest in buying the company in its entirety, the people said. Early last month, Time Inc. filed an amended change-in-control severance plan with the Securities and Exchange Commission that protects bonuses for executives deemed most likely to be affected by a sale.

Time Inc. rebuffed a takeover bid of at least $18 a share from Mr. Bronfman and Mr. Kreiz last year, and it could ultimately decide not to sell. The company is also considering bringing on an outside investor.

Mr. Battista and Jen Wong, 42, Time Inc.’s new chief operating officer, maintain that they are committed to advancing their plans for the company. During a recent interview at its new headquarters in downtown Manhattan, both insisted that Time was on solid footing despite its lackluster financial performance, and that it was done with any hand-wringing about what its strategy should be.

“Those things are behind us,” said Ms. Wong, a former executive of the website PopSugar. “We’re really focused on growth now.”

In a note to employees several weeks ago, Mr. Battista introduced an “innovation challenge” intended to “surface ideas for new revenue-generating products and services to offer our consumers.” The winning team will receive $10,000.

“Think of it,” he said, “as a Time Inc. ‘Shark Tank.’”

Time Inc., with its portfolio of 22 magazine titles in the United States and 15 digital properties, has for years been a vastly different company from the one Henry R. Luce founded in 1922.

Although the print business still brings in roughly two-thirds of the company’s $3 billion in annual revenue, focus has shifted toward other revenue opportunities, including short online videos and events. The magazines share resources, and editors work with the business side, an idea that for much of the company’s history would have been anathema.

More symbolically, Time Inc. recently moved from the iconic Time & Life building in Midtown to a nondescript skyscraper in Lower Manhattan.

“It has always been the case that former Time Inc. people say it’s not what it used to be. Now it’s really not what it used to be,” said Daniel Okrent, a longtime former editor at Time Inc. who was also the first public editor of The New York Times. “It has the misfortune of having the same name, but it’s not related.”

Like other print publishers that have experienced drastic declines in advertising and circulation, Time Inc. has slashed costs, closed bureaus and let talented but expensive journalists go. In the last year, it has replaced longtime editors at Real Simple and InStyle and laid off about 100 people across the company.

While the occasional story in People still generates buzz and Time’s covers sometimes draw attention (one from October featuring an illustration of President Trump won the American Society of Magazine Editors’ Cover of the Year award), Time Inc.’s magazines no longer set the agenda or break memorable stories the way they once did.

But analysts and former employees also describe distinct challenges and missed opportunities that made it hard for the company to adapt to a shifting media landscape. Management disagreements and cost cuts in the 2000s led to high-profile departures that bled the company of talent and left it without a clear succession plan. Until the spinoff, Time Warner and its chief executive, Jeffrey L. Bewkes, took Time Inc.’s earnings and invested them in higher-growth businesses like HBO, leaving Time Inc. itself with little money for reinvestment.

“He saw that he had a stable full of horses, but he also saw that he had a garage full of cars,” Josh Quittner, a former editor and digital editorial director at Time Inc., said about Mr. Bewkes. “So he was going to invest in the garage full of cars.”

A Time Warner spokesman said, “Time Warner has always fully invested in all of our operations, including Time Inc. when we owned it.”

Sitting on opposite sides of a table in a conference room near Time Inc.’s boardroom — where a painting of Luce hangs — Mr. Battista and Ms. Wong lauded new services and products, including a platform for youth sports, called Sports Illustrated Play, and a streaming video channel from People and Entertainment Weekly.

The company has also poured resources into digital video. It recently started a personal finance video series called Coinage. Just last week, it introduced Well Done, a food-video brand for social platforms including Facebook and Instagram. For the bigger screen, the company is working with television networks, including ABC and Investigation Discovery, on shows and special events that it can also cover in its magazines.

“It’s very organic for us to write an article about a new show that’s launching that we happen to be involved in,” Mr. Battista said. “That’s a great example of using our print assets to build new revenue streams.”

Time Inc. is also focusing more on advertising. The company recently purchased several ad technology and data companies, including Viant, the owner of Myspace. And it now has its own advertising studio in Brooklyn called the Foundry.

Mr. Battista and Ms. Wong insisted that Time Inc.’s magazines were still important to the company. And in early February, Mr. Battista and Alan Murray, Time Inc.’s chief content officer, sent a note to employees praising recent developments at the company, including a bump in Time magazine’s online audience.

“These achievements are a testament to one of our key points of difference — Time Inc.’s trusted, quality journalism,” they wrote.

But Mr. Battista and Ms. Wong also said the company was looking to leverage the company’s well-known titles into other revenue opportunities.

“The foundation of the company is, has been and will remain the power of these brands,” Mr. Battista said. “It’s about extending these brands and taking these brands far beyond, obviously, the printed word, which was the legacy of this company.”

To some in the industry, Time Inc. seems to be on the right track even if its financial results suggest otherwise. And within the company, some have described a new sense of collaboration. Employees congregate in common areas, where there are bowls of fruit and free snacks. The company’s new headquarters feature bright video studios and test kitchens, instead of the bar carts and palatial executive offices of yore. (Laura Brown, the new editor in chief of InStyle, coyly described the space as “high concept.”)

“I think they’re absolutely doing the right thing,” said Tim Nollen, an analyst at Macquarie Capital. But, he added, “It remains to be seen how they actually can monetize what they’re doing.”

Still, the de-emphasis on traditional journalism has not gone unnoticed. One editorial employee, who spoke on the condition of anonymity to avoid angering his employer, noted that whether the strategy worked or not, it was not going to lead to the kind of work that the company had historically prized.

Time Inc. is now targeting $100 million in cost cuts this year, though it will not specify what parts of the company will be affected. The company expects revenue for this year to be roughly flat.

Still, Mr. Battista and Ms. Wong are optimistic about Time Inc.’s future. They project that digital advertising revenue will reach $600 million this year and $1 billion in the coming years, and are confident that the company will return to growth.

But Time Inc.’s future as an independent company is uncertain. There are certainly obstacles to a sale. Meredith flirted with buying Time Inc. in 2013, but a sale fell through in part because Meredith reportedly did not want to buy four of the best-known titles — Time, Fortune, Money and Sports Illustrated.

And while some see value in Time Inc.’s short-form videos, others involved in the magazine industry say the company’s appeal may not be in all of its new bells and whistles. In the end, it may be in those venerable magazines that made it so prominent in the first place.