Friday, May 9, 2014

Time Inc To Spin Off Time Warner In June

Come next month, Time Warner, home of HBO, TNT, TBS, CNN, Warner Bros, and more, is formally separating itself from Time, Inc., its magazine publishing company.  And while this is no longer fresh news, it does make me revisit the question of why separate.  Is it a purely financial decision designed to unlock shareholder value or could management not find synergy between these content and distribution segments? 

Does Time Warner believe that the magazine business is so mature that it drives little growth to the bottom line?  And could they not reach across the business segments to build a stronger fit of content and a multi-platform distribution world.  One could argue they tried.  Many years ago CNN and Sports Illustrated attempted to build a cable network, CNNSI, to compete against ESPN.  It never found its footing.  But the idea behind it was sound. 

As print magazines make the crossover to tablet, they require even more video content to sustain themselves.  Couldn't Time Magazine create that with a CNN relationships; couldn't Entertainment Weekly expand its value with the WB?  I can only surmise that the silos between each business segment was so strong and so independent to not enable these possible internal partnerships to grow.  Perhaps as independent companies, the opportunity to partner with brands regardless of whether they competed internally with other brands will no longer be a factor.  If this split of Time Inc. and Time Warner creates more growth for both, then it will be deemed a good thing.  But if it is meant to cast off Time Inc. so it can whither away without impacting the Time Warner bottom line, than that is a shame. 

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