#TBT A Year Later Time Inc's Ripp Betting On Digital For The Future

In a nod to ‘Throwback Thursday’, lets take a look at a recent spin that has been in the news recently. Last June, following a broader market trend, Time Warner (TWX) spun off its magazine business into Time Inc (TIME). After a year of independence the new company’s stock is mostly flat, which is not too shabby considering the company’s top line and operating income have continued to decline. At the time of the spin, the big concern for Time, and for all of the other print focused spinoffs, was the big shift of ad budgets from print to digital. Nothing too original, but there are different strategies for handling a declining business and there was some optimism that Time’s strong portfolio, including magazines such as Sports Illustrated and People, would somewhat ‘better’ insulate the company.

Tasked with overcoming this challenge was former Time exec Joe Ripp, who had also had some prior success at AOL. After a year, his strategy is starting to come into form and one of the first moves was a focus on cost cutting. Layoffs have been heavy and the company is moving to a new, smaller HQ leading to an overall decline in SG&A. More importantly, Mr. Ripp has been keen to try new ideas, including ‘going headlong’ into the digital space. Digiday recently had a piece highlighting a few of his strategic moves including:

Increased focus on digital and technology – growing its footprint, new digital properties and even making acquisitions in the space
Focusing on video
Cutting costs
Experimenting with paywalls

The WSJ also had a nice piece earlier this week examining Mr. Ripp’s strategy decisions. It noted some unorthodox choices such as removing some of the separation between the newsroom and advertisers in order to have better ads. More broadly though, it highlighted his digital plans which he believes are the key to longer term success at Time.

The article notes that Mr. Ripp ‘has no intention of being the last CEO of Time’ and he is certainly acting that way. While one approach would have been to just manage the decline, Mr. Ripp is trying to make something happen and is taking some risks. Of course, success is not guaranteed and there are bound to be mistakes made and money wasted. There are no shortage of critics. One of the biggest hurdles will be shedding its ‘print image’ and that just might be too difficult to overcome. It would have been nice for the company if it wasn’t saddled with cash consuming items such as debt (which was used to fund a pre-spin dividend to Time Warner) or a dividend, but it still has a nice cash hoard to make some moves. Outsiders are giving Mr. Ripp three years to make something happen, which is nice because change, for better or worse, doesn’t happen in a day or even a year. Perhaps one day MBAs will be studying the different approaches CEOs have taken to managing these print businesses and I wonder what story a future #TBT piece will be telling.

Disclosure: Author holds shares in TWX.