Time Magazine Deal Is Latest In A Series Of Media Acquisitions By Out-Of-Market Billionaires – Forbes

In past decades, entrepreneurs and moguls built and expanded their fortunes by starting magazines or selling magazine companies. In recent years, it’s been the other way around in the troubled newspaper and magazine sectors, as out-of-market billionaires acquire media brands as side projects.

The most recent example is yesterday’s announcement of the acquisition of Time Magazine from Meredith Corp. for $190 million in cash by Marc and Lynne Benioff. Marc Benioff is CEO and a co-founder of Salesforce.com, the 19-year-old, $8.3 billion cloud-based CRM platform headquartered in San Francisco.

Marc Benioff, chairman and co-chief executive officer of Salesforce.com Inc., speaks during the Global Climate Action Summit in San Francisco, California, U.S., on Thursday, Sept. 13, 2018. The event brings together industry and political leaders working on improving the conditions and concerns facing climate in the world today. Photographer: David Paul Morris/Bloomberg

The Time Magazine transaction is a personal acquisition by the Benioffs, and unrelated to Salesforce. The Benioffs will not be involved in the day-to-day operations and journalistic decisions of the brand, according to a statement from Meredith.

Benioff joins Amazon’s Jeff Bezos (Washington Post), the pharmaceutical mogul and surgeon Patrick Shoon-Shiong (Los Angeles Times), Laurene Powell Jobs (The Atlantic), and other enormously wealthy people who’ve bought blue-chip media brands in the last half-dozen years.

The sale of Time and three other former Time Inc. giants has been expected for months, after Meredith indicated soon after the acquisition closed in January that it would sell Time, Fortune, Sports Illustrated and Money.

Divestments of this nature are sometimes viewed with skepticism—great brands as hobbies for rich people drawn to the cultural power media businesses continue to have. The question is whether that value is residual, or whether an infusion of new energy and thinking can turn around brands struggling to adapt when their industry’s business model is broken.

In a round of email interviews today, several media executives saw the transaction as a positive development. “This acquisition speaks to the staying power and appeal of iconic, legacy media brands,” says Bonnie Kintzer, CEO of Trusted Media Brands. “Additionally, it shows that print continues to have appeal even to those people (or investors) who are steeped in digital tech.”

A variety of executives echoed that sentiment. “I think this deal makes a great statement about journalism and the importance of keeping it alive and well,” says Condé Nast CEO Bob Sauerberg.

“New buyers understand the tremendous brand equity some of these assets have built,” says Bonnier CEO Eric Zinczenko. “They also know that with some capital injection, these assets can make a pivot away from their reliance on the traditional media model and venture into new revenue streams not previously explored.”

Even some investment bankers and industry observers indicate they are bullish. Samir Husni, director of the Magazine Innovation Center at the University of Mississippi and one of the best-known advocates for print media in the last 20 years, describes the move as business as usual—in a good way. “There’s nothing new about businesspeople buying or starting media companies,” Husni says. “Henry Luce didn’t start as a journalist. The billionaires from the tech world have more faith in legacy and print media than the folks in the legacy print media themselves. Go figure.” [Disclosure: I’m a member of the Magazine Innovation Center Board of Directors.]

Wilma Jordan, founder and CEO of the New York-based investment bank JEGI, says the Time Magazine transaction is a “wonderful validation” of the years publishers spent building brand equity in the Time Inc. titles. “And as always, the power of the press is still in play,” she adds. Jordan notes that the difference between recent print transactions and those of years gone by, such as the 1988 sale of TV Guide for $3 billion, is that modern magazine titles are selling way below their high-water mark values. Indeed, Time Magazine posted 2017 revenue of $173 million, according to the Wall Street Journal. It is expected to decline by 9% this year, to $158 million.

Not all observers view the transaction as a validation of the industry. Reed Phillips, CEO of the investment bank Oaklins DeSilva + Phillips, also based in New York, suggests that media companies—especially print-media companies—have become much less profitable than they once were, to the point that they now need benefactors. “The benefactors are typically not focused on making the business work, but on doing good with the business, or having their voices heard,” Phillips says.

And David Nussbaum, CEO of the food-media company America’s Test Kitchen, describes these acquisitions as “vanity purchases.”

“They’re an attempt to buy a bully pulpit; a political play—anything but an attempt to make money from the acquisitions,” Nussbaum says. “It really is no different from the pre-private equity days, when you had Hearsts, Annenbergs, Maxwells, Conrad Black and many other wealthy families and individuals who sought the prestige, power, platform and sexiness inherent in owning big consumer media. What is new is that investors really can’t even pretend they are purchasing for a return on investment.”

“I suppose that’s the cynical way of looking at these deals,” Nussbaum continues. “Some would say that purchases like Bezos buying the Washington Post and Benioff buying Time are done with the genuine goodwill of preserving a free press in a world where it is extremely difficult to make money in print.”

Meredith says it “expects to announce agreements for the remaining asset sales in the near future.”