Time Inc. CEO: No Mergers Until at Least Next Year

Tax Burden Would Be Too Heavy

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Time Inc. CEO Joe Ripp
Time Inc. CEO Joe Ripp Credit: Daniel Acker/Bloomberg

Don't expect Time Inc. to merge with any of its magazine rivals soon.

Time Inc. CEO Joe Ripp told investors Thursday that no mergers would happen until at least June 2016, which is the two-year anniversary of Time Inc. spinning off from Time Warner.

"The safest thing is to wait two years," he said.

The reason for the wait, according to Mr. Ripp, is the heavy tax burden that would befall Time Warner and its shareholders if a merger took place within that two-year-old window. "We're staying as far away from that as possible," he said.

There's been speculation within the investment community and media circles that Time Inc., the nation's largest magazine publisher, could merge with Meredith, which owns titles like Better Homes and Gardens and AllRecipes. The two companies nearly merged in early 2013, but the deal fell through, resulting in Time Inc.'s spinoff from Time Warner in June 2014.

Time Inc. owns a number of iconic titles, including Time, People, Sports Illustrated, Fortune, InStyle and Real Simple. But its revenue is declining as print advertisers shift their budgets to digital media. While Time Inc.'s digital ad sales are on the rise, they haven't climbed fast enough to offset print losses.

Fourth-quarter revenue at Time Inc. declined 7% to $895 million, falling short of analyst expectations. Newsstand revenue fell 12% during the quarter and subscription revenue dropped 7%, while ad revenue declined 8%.

The company also provided a disappointing outlook for 2015, forecasting a 3% to 6% decline in sales for the full year.

While speaking with investors Thursday, Mr. Ripp seemed to reach out to his peers in the magazine industry regarding potential partnerships.

"I look at Meredith, Conde Nast, Hearst and the entire industry quite frankly, and while they're all owned by individual families, to the extent that those companies were ever interested in really driving value and opportunity, I'd be right there and we'd be able to drive tremendous value," he said.

"There are opportunities for many in the industry to cooperate," he added. "There is, in a time of industry decline, opportunity for consolidations, an opportunity for back office sharing of resources. So there may be ways for the industry to figure out ways to develop value without formal consolidation. And we'd certainly be open to exploring those opportunities with our industry partners."

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