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Asociación Técnica de Diarios Latinoamericanos
Boletín Semanal Noviembre 11, 2018

So, yes. It turns out there was a billionaire willing to buy one of the storied but fading Time Inc. magazines on the block.

And it turns out that billionaire was indeed Marc Benioff, the Salesforce.com co-founder, who for months had been a rumored buyer for one of the titles Meredith Corp has been selling.

But there are a couple twists to this one: Benioff is buying Time magazine, not Fortune magazine and Money magazine, as many employees at those titles had been hoping for. And he is paying $190 million cash — more or less the same number Meredith’s bankers had been floating for some time.

We’ll hear and see what Benioff does with Time over the coming months. The best-case scenario is a Bezos/Washington Post scenario, where he reinvigorates the aging property with a combination of money, aggressive growth goals and a relatively hands-off approach. The downside: Even a billionaire may be frustrated at how difficult it is to turn around a property that peaked decades ago.

(Worth noting: Meredith, which has wanted to dump most of the male-oriented titles it acquired when it bought Time Inc. last year, will still end up working with Time magazine; it has a multiyear deal with Benioff “to provide services such as consumer marketing, subscription fulfillment, paper purchasing and printing.”)

Near-term questions: What happens to Fortune, Money and Sports Illustrated, the other properties Meredith has been selling for most of 2018?

Now that Benioff has made his deal, it gets harder to imagine a billionaire/white knight scenario for any of the remaining properties, though Dan Gilbert’s name was stlll being floated as a Sports Illustrated buyer a few weeks ago.

And while Time Inc. managers expected deals to get done months ago, the fact that they have yet to be announced is viewed as a sign that there’s a gap between what Meredith’s bankers are asking for and what sober buyers are willing to pay. Whoever does buy them will have to be comfortable with the fact that they’re buying businesses in decline.

Here, for example, are financials for the last three years of Sports Illustrated’s life, via the book its bankers at Houlihan Lokey circulated earlier this year:

Revenue:

2015: $239 million

2016: $212.3 million

2017: $184.8 million

Operating Income:

2015: $24.7 million

2016: $6.3 million

2017: $13.4 million

Print ad revenue, not surprisingly, has fallen from $100.1 million in 2015 to $57.4 million last year. Digital ad revenue is growing, from $39.4 million to $49 million, but the digital ad business is getting harder, not easier. Ask anyone who isn’t Google or Facebook.

So, what’s a business with a fabled brand name and those kind of financials worth?

Earlier this summer, Meredith was telling would-be buyers they would need to pay at least $150 million to get their hands on Sports Illustrated. People I’ve talked to who have looked at the property think it’s worth much less than that. But maybe there are more Marc Benioffs out there ...