As if to drive home the fact that certain forms of print media have fallen on hard times, Time Warner's
According to The Wall Street Journal (whose parent company, Dow Jones
The titles -- which are expected to sell for around $300 million, according to the WSJ -- are the ones that Time has had difficulty peddling profitably. Time has 150 magazines under its umbrella -- People and Sports Illustrated are its most pouplar, not surprisingly -- and it has plenty of other well-known names like Fortune and, of course, Time. The big issue here, as implicated above, is that magazines that will most easily translate into the online arena are an important focus. The WSJ cited a memo to Time employees that specifically stated that the division wants to focus more on bigger brands that have a better chance of online success.
Part of the reason for this focus is that Internet advertising has really taken a bite out of print advertising's revenues. That's hardly surprising, considering Google's
It makes sense for Time Warner to divest itself of media properties that don't enhance its profitability. Earlier this year, Time Warner sold Time Warner Book Group -- which included imprints like Little, Brown -- to a French conglomerate for $538 million. And a quick glance at Time Warner's 10-Q reveals that in the first six months of the year, its publishing segment's operating income has dropped 10%, although that figure includes $34 million in restructuring costs, as the company has been striving to streamline its operations and would have been about flat without that expense. The publishing division's operating margin for the first six months of the year is 12%, much lower than the operating margin for Time Warner as a whole, at 28%.
If print newspapers, with their daily content, are suffering from the encroachment of real-time news and information streams, it's not surprising that monthly magazines would face their share of difficulties as well. And of course there's a ton of entertainment and information options that vie for consumers' attention. This latest move by Time Warner shows that the company is aware of the challenges and knows how to face them. Time Warner shareholders should be relieved that the company's taking a hard look at its different business segments to emphasize the most promising and profitable properties.
Alyce Lomax does not own shares of any of the companies mentioned.