Peter Kafka

Recent Posts by Peter Kafka

Time Warner’s Next Spin-Off: Time Inc?


Time Warner (TWX) has yet to dispose of AOL, but there’s lots of sotto voce chatter about CEO Jeff Bewkes’ next move.

Last month, I reported that people familiar with Bewkes’ thinking believe he’s planning on selling off the company’s namesake Time Inc. publishing unit in 2010. Today, Pali Capital analyst Rich Greenfield picks up the torch.

From a note published this morning, where the analyst raised his estimates and target price for the stock:

“Unlike many of its media peers, we believe Jeff Bewkes and the Time Warner Board of Directors have no emotional attachment to the assets within Time Warner. In turn, we would not be surprised to see Time Warner seek a separation or sale of its publishing division (magazines) following the AOL spin. With Publishing set to represent under 10% of Time Warner’s EBITDA post-AOL spin and the inherent difficulties of shifting Time Inc.’s magazine business to an online subscription model, we believe it may make sense to further simplify Time Warner down to only cable networks and filmed entertainment in 2010.”

Anyone want to hazard a guess about what Bewkes might be able to fetch for the world’s biggest publishing company? It lost $32 million on revenues of $800 million last quarter (click to enlarge).


I’ve asked Time Warner for comment, but don’t expect one.

ADDENDUM: Several readers note, correctly, that Time Warner-ditching-Time Inc. is a recurring rumor that comes and goes every couple of years. So this may well be same old same old.

“I  wrote for TIME for 14 years,” writes John S. DeMott.  “Spinoff talk was happening then, even before the merger with Warner.  Ain’t gonna happen now.” Could be!

That said: 1) Time Warner has new(ish) management and 2) this chatter definitely has some currency. At a media conference sponsored by GCA Savvian today, AOL founder Steve Case mentioned that he’d spoken, in a casual manner, with Bewkes this morning and left with the notion that post AOL-spinoff/disposal “my guess is there might be another move in there in the not-too distant future.” To me the clear implication was that he was talking about dumping Time Inc.

[Image credit: broma]

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik