Magazine Business Changes as Time Inc Spins Off and Distributor Shuts Down

Time Inc., the country’s largest magazine publisher, is now an independent company, spun off from Time Warner to eliminate a drag on the parent company’s stock price, according to the New York Times. Time Inc.

is being spun off with little ceremony and a load of debt. Absent the diversified portfolio of Time Warner, Time Inc. will be going it alone with more than 90 magazines and 45 websites in a market that views print as a thing of the past….

As recently as 2006, Time Inc. produced about $1 billion in earnings, a figure that is now down to $370 million. Revenue has declined in 22 of the last 24 quarters.

DC Comics will stay with Time Warner as a part of DC Entertainment. Time Inc. publishes such magazine flagships as Time, People, Fortune, Sports Illustrated, and Entertainment Weekly (which seems to be casting about wildly for ways to get more attention, based on the surveys they’re constantly sending selected subscribers). Much cost-cutting is expected, since newsstand sales are down in an environment where it’s hard to even find newsstands any more. We’ve known for years that it’s a difficult time for print, but because I spend so much time on the computer, I’m actually subscribing to more magazines than ever because it’s great to have them as some time away from a screen.

Along similar lines, from another NY Times article, “the second-largest magazine wholesaler in the country, Source Interlink Distribution, which employs about 6,000 workers, will soon cease operations” due to losing their biggest client. Time Inc. decided to stop using them in May due to unpaid fees. A filing shows $19 million of expected revenue would be uncollectible from Source, with another $7 million due from a previous quarter. That’s a lot of money for a distributor to owe, and it’s no wonder that Time would want to cease dealing with them.

The regional markets that Source Interlink served — Southern California, Chicago and the Mid-Atlantic States — might face shortages of popular Time magazines like People and Sports Illustrated for up to 12 weeks.

That could mean another $4 million in revenue lost for Time. This change means just two national distributors are left, with the magazine business facing the kind of consolidation that comics has been operating under for years. Too bad magazines don’t have the kind of devoted fans that kept the comic market alive, if restricted.

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4 Responses to “Magazine Business Changes as Time Inc Spins Off and Distributor Shuts Down”

  1. Jer Says:

    That could mean another $4 million in revenue lost for Time.

    Would it? If the distributor for those areas already owed them $26 million dollars, would this mean a loss of another $4 million, or would it mean that distributor would just owe them $30 million instead? More than that, actually, because it looks like there was some territory overlap where another distributor will get all of the business instead of some of the business.

    But the damage over the long term might be worse. If there are folks in that area who don’t get their magazines for a few months and replace them with something else, they might decide that they don’t actually need those titles when they come back. I’m not sure who still buys Time off the newsstand (the only time I ever see a copy is when I go to the doctor’s office), but People still gets racked up at the checkout lane at the grocery store and seems to sell through. Losing that spot for a few weeks to another tabloid-like magazine might hurt a lot long term.

  2. Johanna Says:

    I suspect the $4 million figure comes from the magazines that aren’t on sale because they haven’t gotten the new distribution fully up and working yet. That is, if they normally sold X00,000 copies under the old system, if they can only get X0,000 copies distributed until everything works out, they’re calculating the difference as $4 million. I think.

    And yeah, losing people’s habitual attention is a much longer-term risk.

  3. David Oakes Says:

    For a second there I hoped DC as a publisher would now be free to make movies on it’s own. Silly me, Superman Underoos are worth more than TIMEly news…

  4. Dwight Williams Says:

    Yep. That they are, it seems.

    Hoping for a World Atlas to be spun out of Dawn of Justice myself… ;-)

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