In some unwelcome (but not unanticipated) news, Time Inc. staffers were told Monday to be prepared for layoffs as the publishing giant tries to shift its model from a print- to a digital-centric one. The company needs to make itself more attractive to potential investors as it prepares to spin off from Time Warner in the second quarter of 2014, and cost cuts are one way to do that.
But a more convincing strategy would be to show topline growth, and one way to do that is through acquisitions (which Time Inc. has already shown an appetite for with the recent purchase of American Express Publishing).
Another is Forbes. Time Inc. has been mentioned as a possible buyer of the family-owned business brand, which is exploring a sale. This would solve a couple of problems.
Fortune has a meager online presence, having been a channel of JV partner CNNMoney.com over the course of their 8-year partnership. (Fortune doesn’t say what its dedicated traffic is, but one person familiar with the business estimated it to be around 2 million monthly uniques.) Come next May, that partnership is set to dissolve, leaving Fortune on its own to start a new financial news website.
But that’ll be an uphill battle in a category already crowded with bigger, more established online competitors like The Economist, The Wall Street Journal, and, of course, Forbes. Forbes would give Fortune instant online scale, with 28 million uniques worldwide (per the company, citing comScore). It also would give Time Inc. CEO Joe Ripp a way to boost his digital credibility and appear to be a risk-taker with the Street, as Forbes now gets more than half of its ad revenue from digital. (There's also been talk that getting a deal done pre-spinoff also benefits Time Inc. because the bill would be paid by Time Warner.)
A Forbes deal also could accomplish symbolic, but still important goals. Ripp has been trying to change the company's culture and move into new ad formats. Forbes has built its business on the unorthodox practice of letting advertisers (as well as unpaid outside contributors) publish on the site alongside paid staffers—a controversial move, but one that’s been widely imitated by other online publishers. Forbes expects one-fifth of its ad revenue to come from its BrandVoice native ad platform this year.
At the same time, the Time Inc. structure is changing in a way that could make it easier for Forbes’ model to take hold at Time Inc. Traditionally, Time Inc.’s editors reported to an editor in chief, whose role was to keep the company’s journalism safe from business-side interference. One-time editor in chief Norm Pearlstine has returned in the newly created role of chief content officer, and editors are now reporting to their business unit heads, which has purists worried that publishers will be able to run roughshod over editorial. Pearlstine has maintained that editorial integrity wouldn’t be compromised and has hinted at adopting some aspects of the Forbes model, though. Buying Forbes would say loud and clear that the status quo has changed.
“Time Inc. has to make some tough calls on where to invest strategically, and if they’ve decided that this is important, then the Forbes deal could give them the scale that they need," said Peter Kreisky, a publishing industry consultant and a former advisor at Time Inc. The saturated business category raises doubts about Time Inc.'s ability to break through, though. "The real question is, is this the best place to place their bets strategically?”
Forbes also could help Time expand its conference presence, although there’s some duplication (both Forbes and Fortune have a women’s summit, for example).
Both titles are known for their rankings (the Fortune 500, Forbes' rich lists). Fortune is ensconced with the buttoned-up, c-suite; Forbes, the entrepreneurs. But it's hard to imagine there being room for two print publications in their present form. Both have been severely challenged by the fall-off in print advertising. From 2007 to 2012, Forbes’ ad paging fell 43 percent to 1,835 while Fortune’s fell 38 percent to 1,464, per Publishers Information Bureau. Both have trimmed their frequency in recent years. One can imagine various scenarios, from keeping both brands to merging one into the other to folding one altogether.
“In today’s marketplace, there is no need for two magazines,” one print ad buyer said, adding that the brands can work together to provide business content and blanket the market with conferences.