Terms were not disclosed. Time Inc.'s corporate parent, Time Warner, does not break out Time Life's performance in its public filings. But the unit was tracking to post around $350 million in revenues in 2003, said executives familiar with the matter, and one of them said the unit was not profitable.
As such, the unit's performance is but a drop
In a lengthy interview with AdAge.com in mid-December, Don Logan, who as chairman of Time Warner's Media and Communications Group oversaw Time Life, said the company was "exploring alternatives and options for dealing with the problems we have at Time Life. I suspect we'll see some changes there." Time Warner's most recent filing with the Securities and Exchange Commission broadly hinted at the prospect of future restructuring at Time Life.
Mr. Logan made it clear that Time Life was not a favorite business within the company.
"There's been a fundamental shift in the direct-marketing business," he said at the time. "A lot of new rules and regulations about telephone lists, about e-mailing customers, about privacy and sweepstakes. ... It's harder to sell than it was in the past."
ZelnickMedia will fold Time Life into its online and catalog retailer Lillian Vernon to form a new unit called Direct Marketing Holdings Worldwide LLC. The company said that with the new acquisition Direct Marketing Holdings would have yearly revenues exceeding $500 million.
The deal contains a cash component as well as a yearly royalty fee to Time Warner, ZelnickMedia partner Jim Friedlich said. An executive familiar with the sale said the deal contained some restrictions on what new products could appear under the Time Life umbrella, which has reliably repackaged family-friendly fare, such as top musical hits of the 1950s.
Mr. Friedlich said the company had made "no firm decisions" as to whether there would be layoffs among Time Life's roughly 1,200 employees, but that there were "significant synergies" between Time Life and Lillian Vernon. He said Direct Marketing Holdings would keep Time Life's headquarters in Alexandria, Va., for "at least a year."
ZelnickMedia, which was formed by former BMG CEO Strauss Zelnick, is backed in this deal by private equity firm Ripplewood Holdings.
Time Warner significantly pruned its portfolio in 2003, selling its Warner Music Group to a group led by formed Vivendi head Edgar Bronfman for $2.6 billion, and its DVD-CD manufacturing and distribution business to Canada's Cinram International for $1.05 billion. In the spring it sold its 50% stake in cable channel Comedy Central to Viacom for $1.23 billion, and in the fall it sold the Atlanta Hawks basketball team and Atlanta Thrashers hockey team to a consortium of investors.