The Grim Numbers Behind the Time Inc. Spinoff

A blog about business and economics.
June 9 2014 4:54 PM

The Grim Numbers Behind the Time Inc. Spinoff

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In a 1981 cover story,Time magazine accurately predicted the entire Internet, which later proceeded to eat its business model.

The newly spun-off Time Inc. hit the stock market Monday under the ticker TIME and had fallen about 2 percent to $23 as of the afternoon. The magazine company was unceremoniously dumped with over a billion dollars in debt by its parent, Time Warner, after proving to be a drag on its stock price. Shares of Time Warner gained a modest 1.3 percent during the same stretch on the news.

"Time Inc. is being sent off into the world with a less-than-inspiring portfolio," the New York Times noted in a grim portrait of the company's fortunes. The short version is that Time Warner is keeping the profitable assets with bright futures, like CNNMoney, for itself, while Time Inc. has been saddled with expensive and struggling media platforms. Many once lucrative parts of the franchise—Fortune, Entertainment Weekly, and even Time Inc.'s cash cow, People—are not performing to expectations. Time Inc.'s revenue has declined in 22 of the past 24 quarters.

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To get a better sense of what Time Inc. is looking at ahead, we broke out some key statistics on the company's finances, management, and readership below.

• Amount of debt that Time Inc. takes on as part of the spinoff: $1.3 billion

• Size of cuts to editorial costs planned for the coming months: 25 percent

• Amount by which Time Inc.'s revenue fell between 2011 and 2013: 9 percent

• Amount by which Time Inc.'s operating profit fell between 2011 and 2013: 40 percent

• Time Inc.'s earnings in 2006: $1 billion

• Time Inc.'s earnings now: $370 million

• Amount by which Time magazine's ad pages fell between 2008 and 2013: 50 percent

• Amount by which Time's ad pages fell in 2013 alone: 15 percent

• Number of people currently employed by Time Inc.: 7,800

• Number of people laid off from Time Inc. in February: 500

• Number of people laid off in January 2013: 480

All in all, not a pretty picture. Time Inc.'s current plan seems to be slashing its editorial operations, but that doesn't tend to work out so well for newsrooms. While you can build a cheap operation from the ground up, cutting costs past a certain point and putting the onus on the surviving staffers rarely leads to a better product.

Alison Griswold is a Slate staff writer covering business and economics.

 

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