Meredith Acquires Time Inc. in a $2.8 Billion Deal Backed by the Koch Brothers

Meredith Corporation, a media company with print magazine and broadcast channel assets, will acquire Time Incorporated in a deal totaling $2.8 billion, according to a press release issued by the company on Sunday. The all-cash transaction is underwritten by a division of Koch Industries, which is headed up by the controversial billionaire brothers Charles and David Koch.

The Des Moines-headquartered Meredith stated that the deal was approved by both companies’ boards of directors and is expected to close in Q1 of 2018. Meredith will pay an $18.50 per share price for the Time Inc. stock, a 46% premium over the closing price on Nov. 15, prior to the reports of the acquisition going public.

Meredith chairman-CEO Stephen Lacy said that the combined reach of the two companies would exceed 200 million consumers. The enlarged company would generate about $4.8 billion and adjust earnings of $800 million. Meredith said it expects to generate $400 million-$500 million of savings from streamlining operations during the first two years.

“We are adding the rich content-creation capabilities of some of the media industry’s strongest national brands to a powerful local television business that is generating record earnings, offering advertisers and marketers unparalleled reach to American adults. We are also creating a powerful digital media business with 170 million monthly unique visitors in the U.S. and over 10 billion annual video views, enhancing Meredith’s leadership position in reaching millennials.”

Stephen Lacy, CEO of Meredith Corp.

Time’s various assets include Time Magazine, Sports Illustrated, InStyle, People, as well as subscription processing and membership deals division, Synapse Group, Inc.

Meredith’s deal is backed by $650 million from Koch Equity Development, the investment affiliate organization of Koch Industries, an industrial conglomerate that was founded in the oil and gas business. According to Meredith, KED will not have a seat on its board, and will have “no influence on Meredith’s editorial or managerial operations.”

The Koch brothers have become controversial figures for their heavy spending to support political candidates and causes, most of them very conservative. By some projections, the brothers expended nearly $1 billion during the 2016 federal election cycle to further their pet causes. There is speculation that the brothers are diversifying their investments into media to have greater influence in culture and shaping popular opinion on issues such as tax policy and climate change.

KED has “deployed in excess of $8 billion of industry agnostic principal investments over the last five years,” Meredith said in announcing the deal.

As part of the transaction, Time Inc. CEO Rich Battista will step down once the deal is completed. He took the helm as Time Inc. CEO in September 2016. He joined Time Inc. as head of People and Entertainment Weekly in March 2015.

“I am proud of our accomplishments and thank the talented teams across the company for their extraordinary work, relentless commitment, and passion,” Battista said. “Together, we moved quickly and successfully to launch, grow, and advance our multi-platform offerings during unprecedented times in the media sector.”

The two companies had several rounds of acquisition talks in recent years, but were never able to come to a conclusive deal. Meredith’s best-known brands are Better Homes and Gardens and Family Circle, while New York-based Time Inc. is the home of Time magazine, Entertainment Weekly, People, Sports Illustrated, and Fortune.

The acquisition comes at a time when the print magazine business that Time Inc. helped build is struggling to retain readers and advertisers. Time Inc. earlier this month reported a 9% decrease in its revenue year-over-year for the third quarter and a 12% drop in advertising and circulation revenue.

Time Inc. was valued at about $4 billion in June 2014 when it was spun off from Time Warner. The 1989 merger of Time Inc. and Warner Communications helped usher in the era of mega media conglomerates.