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Time Warner Magazine Sale to Meredith Could Be a $2.9B Deal

Meredith Corporation is the publisher of Better Homes and Gardens and Ladies' Home Journal

Time Warner's possible deal to sell most of its magazines to Meredith Corporation could be worth up to $2.9 billion, according to an analyst's report.

The sale could enable Time Warner to hand off some of its struggling print brands to Meredith, which has a slate of female-focused glossies. It would keep Time, Sports Illustrated, and Fortune, which first reported the possible deal.

UBS analyst John Janedis estimated in a Wednesday night research report that Time, Sports Illustrated and Fortune account for less than 10 percent of Time Inc.'s earnings before interest, taxes, depreciation and amortization.

Without those titles, the crop of magazines Meredith would purchase would be valued between $2.4 billion and $2.9 billion, the report said.

The deal would include magazines including People, Entertainment Weekly and InStyle. The New York Times  reported that Meredith, the Des Moines-based publisher of Better Homes and Gardens and Ladies' Home Journal, was the leading suitor.

Time Warner and Meredith did not reply to requests from TheWrap for comment.

Hal Vogel, CEO of Vogel Capital Management, told TheWrap that consolidating ownership under a separate publisher, like Meredith, could help the magazines adapt to the digital age.

"It's good for both because with shrinkage of print circulation, et cetera, and movement to digital delivery, there's a need to consolidate distribution and even admin and editorial operations to save expenses and scale to the new reality," he told TheWrap. "Both companies ought to benefit from this."

David Renard, the managing partner of the analyst group mediaIdeas, said the deal would allow Meredith to license content across a larger stable of brands focused on a female audiences.

"They'll find synergies with some of the lifestyle brands that they have today," Renard said. "People, for instance, very often is much more female-focused in terms of the readership."

For Time, which laid off nearly 500 employees last month, the sale would be a way to focus three flagship publications.

"People and the celebrity magazines have been struggling more dramatically over the last few years," Renard said. "Around 9/11, and before that, the celebrity magazines had been doing great, selling like hotcakes."

He added: "Time and Sports Illustrated, those are the leaders in their categories. … I could see them keeping on as leaders since those digital brands or brands beyond the magazine side have done very well."

The move reflects an industry-wide trend toward publishing consolidation. Last year, News Corporation announced it would split its publishing wing — which includes HarperCollins, the Wall Street Journal and a crop of British and Australian newspapers — into a separate company, leaving the more lucrative television and entertainment divisions unsaddled by the print side's troubles.

Revenues at Time Warner were down 6.6 percent and its earnings fell 25.4 percent in the last fiscal year.

About 9 a.m. PT on Thursday, Time Warner stock was up 1.23 percent to $53.50. Meredith stock rose 2.25 percent to $38.83.