Time Warner Files Plan Ahead of Time Inc. Spinoff

Time Warner filed documents Friday evening in preparation for the planned spinoff of publishing division and No. 1 U.S. magazine company Time Inc. next year. While the company didn’t specify any dates, it did provide plenty of detailed financial information. The documents revealed just how hard the publisher of People, Time and Sports Illustrated (along with the rest of the publishing industry) was hit by the 2008 recession. Between 2008 and 2012, total full-year revenues fell 32 percent, from $4.61 billion to $3.44 billion. Advertising revenue fell 25 percent, from $2.42 billion to $1.82 billion, while circulation revenue fell 21 percent, from $1.52 billion to $1.21 billion. There was considerably less decline in the first nine months of this year, with total revenues falling 3 percent from $2.47 billion to $2.39 billion, advertising revenue falling just 2 percent from $1.29 billion to $1.27 billion, and circulation revenue falling 7 percent from $878,000 to $816,000. The IPO documents included detailed information about Time Inc.’s executives’ salaries, including newly appointed CEO Joe Ripp and his predecessor Laura Lang. Ripp, who officially took over on Sept. 3, has an annual base salary of $1 million “subject to discretionary increase,” plus an annual cash bonus with a target amount of $1.5 million. He is guaranteed a minimum $750,000 cash bonus for 2013 “in recognition of the fact that he forfeited compensation from his prior employer to join [Time Inc.]” Lang, who joined the company in January 2012 and announced her resignation in March 2013, received a total of $7.61 million in compensation during 2012, including a salary of approximately $1 million, a $3 million bonus, and more than $600,000 in relocation expenses (her former employer, Digitas, is based in Boston). As part of her separation agreement, Lang will continue to receive her base salary—plus a bonus—through November 2015, and will be given a pro-rated $2.3 million bonus at the end of this year and a $2.5 million transaction bonus for her role in the spinoff. And just in case Lang is itching to get back to work, Time Inc. included “career counseling and outplacement services” valued at up to $30,000. Elsewhere in the documents was a long list of risk factors to the proposed spinoff. Among these were the threat of digital media (“The ability of our paid print and digital content to compete successfully with free and low-priced digital content depends on several factors, including our ability to differentiate and distinguish our content…as well as our ability to increase the value of paid subscriptions to our customers,” it explained), declines in print ad revenue and newsstand revenue (which fell 10 percent in 2012), and recent changes in executive leadership, which has been “disruptive” to Time Inc.’s business and may make it “more difficult to attract and retain the key employees we need to meet our strategic objectives.” The company also will be taking on an unspecified level of debt. The restructuring in the first quarter of 2013, in which 6 percent of the company’s staff was laid off, has cost approximately $60 million so far this year “related primarily to headcount reductions.” The company warned that it could be forced to do some further cost-cutting after the spinoff, which “may involve moving more of our business operations and corporate functions to outsourced arrangements or off-shore locations.”

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Time Warner Files Plan Ahead of Time Inc. Spinoff

Revenues dropped nearly one third since recession

Emma Bazilian

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Emma Bazilian