NA IMPRENSA INTERNACIONAL >
How Will 2 Magazine Titans Merge? Carefully
When Jack Griffin, the former president of the magazine company Meredith, took the reins at Time Inc., he threw a holiday party for his staff on the 34th floor of the Time & Life Building. For many employees at the famously hierarchal company, their first visit to the rambling executive suites that inspired the sets of “Mad Men” became known as “The Miracle on 34th.”
Mr. Griffin lasted just six months at Time before he was asked to leave by Jeffrey L. Bewkes, the chief executive of its parent company, Time Warner, who publicly rebuked Mr. Griffin, saying that his “leadership style and approach did not mesh with Time Inc. and Time Warner.”
As bankers and media executives hammer out the details of creating a new publicly traded company to house the magazine titles of the Meredith Corporation and the lifestyle titles of Time Inc., employees at both companies have been wondering how executives will take on the harder task of merging two very different corporate cultures.
Meredith’s headquarters in Des Moines have an open floor plan; the executives have their offices on the first floor and favor early-morning meetings. A recent lunch at one of Meredith’s magazines featured kale salad and rosemary-infused cucumber lemonade. Time executives tend toward lunches at Michael’s, where the dry-aged steak is a highlight, and after-work cocktails at the Lamb’s Club.
And then there are the postrecessionary approaches to travel: Meredith’s chief executive turned its corporate jets into shuttles with open seating, while Time still allows staff members to expense hotel rooms at the Four Seasons.
“It’s like the Yankees’ farm team taking over the Yankees,” according to a current Time Inc. executive who, like many who talked about the merger, declined to be identified while criticizing bosses or potential bosses.
The merger news appears to be more troubling to employees at the long revered Time Inc., whose lucrative titles like People and InStyle have been essentially sold off by Time Warner and are likely to be overseen by Meredith’s chief executive, Stephen M. Lacy. Time Inc. employees have made cracks about Des Moines and shared more sobering fears about the merger.
And unanswered questions swirl around the offices: Will Time Inc.’s Cooking Light and its fierce rival at Meredith, Eating Well, be expected to share intelligence? Can celebrity titles like People and InStyle flourish sharing a publisher with Wood magazine? And, most important of all, how many former Time Inc. executives might be moved to Iowa?
Press officers for both Time and Meredith declined to comment about any specific negotiations. But an earlier effort to blend Meredith’s folksy culture with the titans of Time failed quickly.
In August 2010, Mr. Griffin became the first chief executive to join Time Inc. from outside the company. His efforts to restructure some of the company’s entrenched hierarchy and infuse his management experiences from Meredith were largely rebuffed. While he garnered praise for the holiday party, staff members bristled when Mr. Griffin, a marathon runner, introduced 7:30 a.m. breakfast meetings — similar to the daily meetings he attended at Meredith, but a shock to the culture at Time Inc., where late nights on deadline are typical.
But this time, Time and Meredith are blending the titles that magazine industry executives say are more compatible. Time is holding onto the older titles that gave the company its gravitas, like Time, Fortune and Sports Illustrated. The new company will include titles it created or purchased in recent decades, like the cash cows People and InStyle and smaller titles like Southern Living and This Old House.
Both companies also have major workforces beyond their home cities. Only 3,000 of Time Inc.’s nearly 8,000 employees are based in New York City, with offices in London and Birmingham, Ala. Meredith has its 1,000 magazine employees split evenly between its midtown offices on Third Avenue and its headquarters in Des Moines.
“If you take Time, Fortune and Sports Illustrated from the mix, you have much greater similarity to the titles that are left than differences,” said Peter Kreisky, who worked as a senior adviser to Mr. Griffin at Time Inc. and who also has advised Meredith in the past.
In recent years, Meredith has actually fared worse than Time in terms of advertising pages for its monthly titles. Craig Huber, an independent research analyst with Huber Research Partners, noted that Meredith performed better during the recession, then dropped off relative to its competition as the economy improved. But he added that Meredith has continued to expand its magazine business while Time Warner shifted its focus elsewhere.
“Meredith has been willing to invest in small acquisitions that Time Warner has been trying to get out of,” he said. “Time Warner is focused on the rest of their business, all of their entertainment business, whereas Meredith only has magazines and TV stations.”
Meredith has also focused on bringing in new sources of revenue from events and custom publishing around their magazine titles, according to Reed Phillips, a managing partner for DeSilva & Phillips, a media banking firm. He said that Mr. Bewkes believed that “under Meredith’s management, with their ability to monetize marketing services for the Time Inc. magazines,” the magazines would be “better off and more profitable.”
Mr. Kreisky said that when he was hired by Meredith a decade ago to reinvent its corporate strategy, the magazine company was trying to grow beyond the category of shelter magazines. He pointed to its acquisitions of Gruner & Jahr’s magazines, like Family Circle, and to how its existing titles expanded their platforms, as Better Homes and Gardens did in its licensing deal with Wal-Mart and its television specials. Mr. Kreisky noted that Time had not leveraged its highly regarded brands as profitably over the years, suggesting that they could have developed a television network affiliated with People.
“Meredith is a very businesslike company,” Mr. Kreisky said. “They’re very practical, pragmatic. They don’t sacrifice editorial integrity. But they take a balanced approach to the development of their brands, whereas Time Inc. had an obsessive need for editorial control for everything around their brands. As a result, they’ve lost huge opportunities to develop their brands in other platforms.”
While Time executives privately characterized Meredith executives in the past week as being cheap on everything from compensation to their magazines’ spending on paper stock, former Meredith executives say the company merely spends wisely.
While public filings do not reveal the salary of Time Inc.’s chief executive, Laura Lang, Mr. Lacy makes an annual base salary of $950,000 as Meredith’s chief and has total compensation of $5.8 million including stock awards. Mr. Griffin said that when he worked at Meredith, the company focused aggressively on spending judiciously and weathering the recession.
“There’s a difference between spending and investing, and Meredith has aggressively invested,” Mr. Griffin said. “There really is a sense we’re all in this together.”
Time, which its former executive Ed McCarrick described as “the Harvard of the publishing business,” has followed a very different trajectory. Nancy Williamson, who worked for the company from 1959 to 1989 at Sports Illustrated, Time and People, described how the company evolved from a news organization investing in serious journalism to a much fatter company.
“Greed came to the company in the ’90s,” she said. “It was just a huge company: huge bonuses, huge salaries, stock shares for the big guy, not the little guy.”
Jim Kelly, a former Time Inc. executive, stressed that the company had tried to address its costs for years and added that “Time has had more restructurings than Angelina Jolie has tattoos.”
Titles like InStyle may be able to thrive after the transition in ways it has not previously, as part of a company that has sometimes turned up its nose at celebrity journalism. Lynette Harrison Brubaker, who for eight years was InStyle’s publisher, noted how much attention the magazine paid to its readers, which complements the extensive consumer data Meredith tracks and studies about its customers.
“The focus for everything that Time Inc. did was how was the reader going to react,” Ms. Harrison Brubaker said. “It was a laser focus.” She added that “From that standpoint, I could see InStyle and frankly all of those titles thriving with Meredith.”
There still will be plenty of growing pains. One former Time Inc. editor said Meredith executives should prepare to be surprised when they discover how much money magazines like InStyle spend on celebrity fashion shoots.
“They’re going to have sticker shock,” the former editor said, chuckling. “Every time they blink, it’s another 20 grand.”