Buy Meredith, Stay Away from Time

Time Warner Ends Talks With Meredith and Will Spin Off Time Inc. Into Separate Company [NYTimes]

Time Warner Ends Talks With Meredith and Will Spin Off Time Inc. Into Separate Company              [NY Times]

Time Warner–and the now soon-to-be-spun-off Time Inc.–will certainly command far more headlines and attention, but I’m investing my money in Meredith Corporation.  Time Warner’s originally planned deal to sell the bulk of its magazines to Meredith may have blown up because of hard financial data, but the root cause goes much deeper than that:  its operating models—and as I wrote last month, about media’s distinct corporate cultures.

Time’s culture creates its operating model which translates to financial performance in an industry that continues to decline.  Inherent high costs, fabulous perks, parties, offices and (employee) expectations are out of step with publishing’s market conditions.  Since announcing the proposed merger, Time’s employees were certainly more panicked than Meredith’s were and for very good reason.

Although Meredith certainly has felt pressures in its core publishing business, their lower-cost operating model–a reflection of corporate culture–better positions the company to manage through publishing’s continued evolution.  Meredith’s culture also does not allow for out-sized ego to dominate, even commandeer strategy which undoubtedly explains why it is hard to find another old media company that has leveraged brands across newer platforms as well as Meredith has.

One need not look much further than Time Inc.’s Musical CEO Chairs to understand how closely culture, operating models and corporate performance are linked in publishing. Time Warner simultaneously announced plans to spin Time Inc. off and that their CEO, Laura Lang would exit as soon as the transaction was completed. Ms. Lang replaced Jack Griffin in that role after it became apparent the ex-Meredith executive didn’t click with Time’s culture.

The fundamentals of publishing have been awful and won’t get any better for companies unwilling to adopt Meredith-like qualities.  Fundamentals always rule while stars will come and go.  Time Inc.’s star system can never compete with Meredith’s fundamentally strong business and I’m glad their proposed merger was killed so I can take my money out of Time Warner stock (and not get saddled with Time Inc.’s)…now I can put it into Meredith Corporation.

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