May 8, 2014 Last Updated 4:24 pm

Time Warner picks a date for its spin-off of Time Inc. – May 23

The first of what may be several media property spin-offs this year will occur on May 23 when Time Warner rids itself of Time Inc. Owners of shares in Time Warner will receive one share of Time Inc. common stock for every eight shares of Time Warner common stock they hold on that date, the distribution date for the shares being June 6 (yes, D-Day).

Time Warner announced its Q1 earnings last week and the split off Time Inc. had $745 million in revenue, up a bit over the same time period last year. But the new company also would have recorded a loss of $94 million in the quarter had it been a separate company.


In its SEC filing, the company showed that the revenue and income, though declining, was fairly steady for the group. In 2010, Time Inc. had revenues of $1.935 billion and net income of $312 million. This declined to $1.807 billion in 2013, with net income at $201 million.

But declining revenue or income is not the biggest hurdle facing the new company. The spin-off will result in Time Inc. incurring $1.3 billion in debt, much of it the result of the $800 million price tag it has put on its IPC Media unit in the U.K.

“Following the Spin-Off, we will have substantial indebtedness and we may increase our indebtedness in the future. In connection with the Spin-Off, we have entered into a credit agreement providing for the Term Loan in an initial principal amount of $700 million and have issued $700 million aggregate principal amount of the Senior Notes. In addition, the credit agreement provides for a five-year $500 million Revolving Credit Facility, of which up to $100 million will be available for the issuance of letters of credit,” the SEC states.

Time Inc. will start life as a separate company with many established and successful brands including People, Sports Illustrated, InStyle, Time, Real Simple, Southern Living, Entertainment Weekly and Fortune in the U.S., and Marie Claire, InStyle, Decanter and World Soccer in the U.K. Without the burden of its debt, it would automatically be considered one of the world’s leading magazine publishers – and it may still be if it’s management team can juggle things effectively without resorting only to cost cutting.

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