March 07, 2013 at 09:21 AM EST
Time Warner Reports Plan to Spin Off Magazine Business (TWX)

Media company, Time Warner Inc (TWX) reported on Wednesday that it plans to spin off its magazine business into a separate publicly traded company.

Time Warner said that its board has approved the decision to separate its magazine business, which will include 21 titles, including Time Magazine, Sports Illustrated, and People Magazine into its own publicly traded company later this year.

As part of the spin off, Time Inc. CEO Laura Lang will step down from her position after being with the company for only about a year. The company has be unable to maintain a consistent CEO since the departure of former CEO Ann Moore in 2010. Lang said that she “decided that taking the company through a transition to the public markets is not where my passion lies.”

This spin off, will be the third spin off that occurred within the parent company since CEO Jeff Bewkes became CEO. Bewkes, who prefers to focus on faster growing businesses, spun off Time Warner from America Online (AOL) in 2009.

Separating the businesses comes at a difficult time for print journalism. In the past three weeks, The New York Times reported that it is planning to sell The Boston Globe, and the parent company of Readers Digest filed for bankruptcy. As online media grows, print communications continues to suffer, which has forced Time to lay off 6% of its workforce last month.

In attempt to boost sales, rumors of a business relationship with Better Homes and Gardens publisher, Meredith Corp is being discussed. The two companies have been talking about focusing some of Time’s magazines more towards women readers.

USB analyst, John Janedis said last month that he believes that the assets of Time may be worth up to $3.2 billion.

Time Warner shares were up $1.10, or 1.98% during premarket trading Thursday. The stock has increased 18% in the past year.

The Bottom Line
Shares of Time Warner Inc (TWX) have a 2.07% yield, based on Wednesday’s closing price of $55.46.

Time Warner Inc (TWX) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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