When Time Warner spins off its magazine unit, the world's biggest magazine company will become an anomaly: a publicly traded media company consisting entirely of magazines.
Time Inc. titles were once the crown jewels of media, generating nearly a billion in annual operating profit just a decade ago. By 2012 that had fallen to $420 million, a precipitous 25% drop from the year earlier. Despite recent cost cuts, that portfolio -- and its infrastructure -- was built for an era when ad dollars were plentiful.
Things have changed. "Time Inc. needs to be reinvented for the digital age," said Michael Wolf, CEO of Activate, a consultancy that works with Condé Nast. "Magazines are still a great experience. The format shifts to tablets and mobile bodes very well for the magazine medium."
As an independent company, the optimistic argument goes, Time Inc. will be able to invest in the future of its brands without the pressing need to deliver results to Time Warner. The downside is there's a lot of restructuring to do to bring Time Inc.'s costs in line with the realities of the print-magazine world, and execs will have to do that out in the open, testing the patience of shareholders.
Under CEO Laura Lang, Time Inc. pursued some obvious opportunities, including new ad products and technologies. And it focused on subscriptions and data, and finally struck a deal with iTunes, the missing piece in Time Inc.'s "All Access" subscription plan that allows subscribers to pay once and have their subscriptions on all devices. Ms. Lang also pursued content for platforms that most interest advertisers of late: video and content for mobile devices.
But Ms. Lang won't be around to run the new Time Inc. So, what should an independent Time Inc. do?
Embrace native ad formats. The magazine world invented "native ads" decades ago with custom publishing. Publishers should be leaders in inventing formats that fit the content environment and deliver subscriber value.
Renovate musty online properties. SI.com and People.com are behemoths, but they're under attack from the likes of SBNation and Pop Sugar. Time Inc. needs to start innovating. Separating SI.com from Turner was a start, but now Time Inc. needs to figure how to operate one of its profitable online ventures CNNMoney, a joint venture with Time Warner, going forward.
Rediscover consumer-marketing prowess. Meredith Corp., Condé Nast and Hearst Corp. moved heavily into marketing services in the past few years as ad pages fell off a cliff. Time Inc. was once one of the finest consumer marketers in the world. Now it must relearn how to do that in the digital age and provide more value to its advertisers.
Name an outside leader with authority. The top job at Time Inc. has been a revolving door since longtime CEO Ann Moore retired in 2010, which is part of the problem. The CEO role could be a very attractive spot for an outsider, like, say, former Viacom chief Tom Freston, now ministering to the MTV of Brooklyn, hipster-media company Vice.
Ax weak titles. As hard as it is to imagine a Time Warner without Time Inc., can you imagine Time Inc. without a print Time magazine? Newsweek's print edition fell victim to new technologies and changed news habits; Time Inc. will have to make some hard decisions on titles from Time to SI for Kids to Entertainment Weekly.
Start launching things again. Once, Time Inc. was in the business of launching brands, but it's been years since it has invested in new content businesses.
Embrace video, even TV. Building multiplatform-content brands means embracing video. That video, not tied to cable-TV distribution deals, could fill the pipes of a new generation of distributors, from Xbox to Aereo, Boxee to Apple TV, Samsung to Intel. Time Inc. is leaving Time Warner, but it may end up a TV company once again.