There was a time at media conglomerates when content was king, but those days are long gone. Now, will Time Warner Inc. (NYSE:TWX), the poster child for that saying at one point in its history, spin off its magazine division? Perhaps, notes Pali Research analyst Rich Greenfield. The move follows an announcement Tuesday from Hachette Filipacchi Media U.S. that it will sell some of its magazine holdings, including Popular Photography, Flying, Boating, Sound & Vision and American Photo to the U.S. division of Sweden's Bonnier Corp. for an undisclosed amount.
In a research report, Greenfield writes:
"With publishing set to represent under 10% of Time Warner's EBITDA post-AOL ... and the inherent difficulties of shifting Time Inc.'s magazine business to an online subscription model, we believe it may make sense to further simplify Time Warner down to only cable networks and filmed entertainment in 2010."
Falling advertising revenue for many U.S. magazines has made them candidates for divestiture as their parent companies look to shed underperforming assets and invest in growth. The Publishers Information Bureau pointed out in April that only 15 magazine titles out of 246 posted advertising gains in the first quarter of 2009. Overall, magazine advertising pages fell 26% in the first quarter. Of the large magazine publishers, no magazines at either Hachette Filipacchi or Hearst Magazines posted gains. Time Inc. -- a unit of Time Warner -- had only one title that posted a positive gain in ad pages. - Gerald Magpily
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