Bloomberg reports that Meredith has approached Time Inc. to begin merger talks
Bloomberg is reporting that Meredith has contacted Time Inc. about a possible merger, though neither company has confirmed the rumor (though the report has sent Time Inc. stock up, and Meredith stock down, showing which is the weaker partner here – that would be Time).
Here is the Bloomberg story.
Back before Time Inc. was spun off of Time Warner, the parent really was looking to sell Time Inc. off whole, but could not find a buyer. At the time, Meredith was considered the logical partner. But there was a problem, Meredith coveted certain properties and was far less interested in others, such as the weeklies. So, Time Warner spun off Time Inc. and installed Joe Ripp as CEO.
Spin offs are great for those who make bonuses for such things, and for the shareholders that get stock in both companies. But Time Inc. was a huge mess and the new management clearly was in over their heads. When Ripp left the company and was replaced by Rich Battista in September the stock eventually got a boost, if only because Battista fanned the rumors of a merger.
“We’ve all seen the continuing speculation around whether someone might try to do a deal with Time Inc.,” Battista said in December, “it would not be surprising if third parties were to show interest in our company.”
Meredith now may get a second crack at Time Inc. Why would they be interested now? Well, if you recall, Meredith had its own failed effort at a merger early last year when its bid to merge with Media General fell through thanks to Nexstar intervening. But Meredith got a nice termination fee out of it all, and then began making noise about seeking a partner.
Time Inc. has, meanwhile, gone through staff reductions, which would be attractive to a merger partner. It has also realigned its sales staff.
One could argue both sides of the sales realignment scheme, but as someone with M&A experience, I always worry about buying a property that doesn’t come with experienced staff, unless I already own a title in the same space. There is certainly some overlap and synergies between some of the Meredith and Time Inc. brands, and that might be enough to drive the deal, but the damage done to Time Inc. in the past couple of years may have been enough to prove fatal.
But, if this report is true, I think a deal will get done. The actors in this have their blood up, and if there is one thing about M&A that I think holds true, it is that once people get excited about making a deal it is hard to stop them (we who have been in the media M&A business count on this to help us complete the deal).
I think 2017 could well see some major media mergers. Last year, Gannett acted like a love-sick kid looking to acquire Tribune Publishing (now absurdly known as tronc), but I never believed that deal would happen and was proved right (I was convinced the publisher of the LA Times and Chicago Tribune wanted to go through the election cycle and wanted too much, too soon). Now, however, the time might be right for a deal.
So, things could heat up, and with no government oversight to worry about, some of the deals we might see later this year could be huge – assuming none of the players involved have insulted the sultan.