After two previous attempts fell through, Iowa-based Meredith Corporation on Sunday negotiated a $2.8 billion deal to purchase rival magazine publisher Time Inc. — thanks in part to an infusion of $650 million cash from Koch Equity Development, the private equity arm of conservative billionaires Charles and David Koch.
But industry insiders are questioning Meredith’s promise that the brothers, well-known for their conservative activism, would remain passive investors and stay out of the day-to-day editorial decisions of Meredith’s new holdings, which include storied brands such as Time, People, Fortune and Sports Illustrated.
“The Koch money is very troubling,” said Jeff Jarvis, a professor at City University of New York’s graduate school of journalism.
Jarvis, a long-time media watcher, is also a co-founder of Entertainment Weekly, one of the companies that will now be absorbed into the Meredith empire along with Time, People and Sports Illustrated.
“Magazines are not good business,” said Jarvis who said Koch’s desire to drop nine figures on media suggested an ulterior motive despite Meredith’s public assurance that “KED will not have a seat on the Meredith Board and will have no influence on Meredith’s editorial or managerial operations.”
“They’re buying in to have a bully pulpit,” Jarvis said of the Kochs. And Jarvis worried that “self censorship” would seep into reporting even without direct meddling. “[Rupert] Murdoch insisted that he wouldn’t have a voice in the Wall Street Journal and it would be an independent group — and who’s policed that in the last decade?”
The Kochs are no novices to the media business either, funding an array of often highly political ventures including, the libertarian-leaning Reason Magazine.
“A lot of deals would yield higher returns and be safer than this one,” Gabriel Kahn, a professor at the USC’s Annenberg School of Communications and Journalism, told TheWrap. “It’s too much to ask that the Koch brothers put down more than half a billion on a media deal and don’t have some interest that related back to their industrial concern.”
“These things don’t happen at the stroke of midnight, they happen gradually over time. The alignment of the Wall Street Journal editorial page with Fox News is probably much closer than it has ever been before,” he added.
Indeed, when Murdoch and NewsCorp purchased the storied broadsheet in 2007, a nervous Bancroft family forced the Australian media titan to agree to the creation of an “Editorial Integrity Committee” to serve as a quasi-public editor to insure newsroom standards.
“The five-person Special Committee is an independent body charged with monitoring the adherence of The Wall Street Journal and Dow Jones Newswires to the highest ethical and professional standards,” the company said in a press release last year.
That, however, has not happened, according to at least one person familiar with the matter.
“It’s window-dressing,” a former Wall Street Journal employee with knowledge of the committee told TheWrap. “It was a sop to the Bancroft’s and the public when the sale happened, but the practical consequence is negligible.”
The individual could not recall any instance where actual editorial coverage had been changed. A spokesperson for Dow Jones — a parent company of the Wall Street Journal — declined to provide an example and directed TheWrap to committee chairman Thomas Bray, who was not immediately available for comment.
In 2011, Christopher Bancroft said he regretted the sale of to Murdoch.
Still, the corporate outlook of the merger has been bullish. On Monday shared of both Time and Meredith jumped about 10 percent on the news.
“You’re going to wind up with a bigger better publisher, probably run more efficiently and a much larger digital operation that will have the advertising scale to at least compete with google and Facebook on a better footing,” an industry analyst who tracks both companies told TheWrap.
And many have speculated that Meredith might sell off key Time Inc. brands to focus on its core strengths of women’s magazines and monthlies.
“It’s logical to assume that Meredith will dump Time and Fortune, which they never wanted,” former Time Inc. editor in chief John Huey told The Daily Beast. “Perhaps the Kochs have already bought them, or arranged to sell them to suitable proprietors.”