What a Time Inc. sale might look like

Pssst...wanna buy the world's biggest magazine publisher? It might be for sale very soon, if investors and analysts are correct in their hunches.

Speculation that Time Warner (TWX) will sell Time Inc. has flared up in the past few days after a major investor said he expects the deal to happen. Gordon Crawford, managing director of the Capital Group, was quoted at a media conference saying the conglomerate will exit the magazine publishing business in order to focus its energies on entertainment and broadcasting.

Crawford didn't put a timeframe on his prediction, but Frederick Moran, managing director of The Benchmark Company, tells DailyFinance the sale is most likely to take place in the next six to nine months. "I think they want to get to a point of complete strategic focus as quickly as possible," he says. With the spinoff of AOL (parent of DailyFinance) expected to be completed early next year, it allows Time Warner to make a strong case to Wall Street that it's a whole new company, and not just the latter-day version of the firm that bumbled into the most disastrous merger in media history almost a decade ago.

Of course, you can't have a sale without a buyer, and there aren't too media entities that can afford to swallow a $4 billion property in one gulp. (That's Moran's valuation; some analysts believe the price could end up being closer to $10 billion.) Moran says Time Inc. would almost certainly prefer to sell all of its 100-plus titles in a single package, if it can. "It doesn't necessarily maximize the value, but to get it done in one shot and not have lingering discontinued operations sitting on your income statement just makes it cleaner and easier for investors to understand."

If that proves impossible, Time Warner can resort to selling off its publishing operations in chunks. One unit that could find a home quickly is the Southern Progress division; Meredith Corp. (MDP), publisher of Better Homes & Gardens, has long had an interest in it, says a media executive familiar with the company's thinking.

But if it goes the piecemeal route, Time Warner will need to act with a high degree of coordination. "If they sell a bunch of their top titles and let some of the less attractive titles linger and take the risk of them not getting them sold, they get stuck with an unattractive asset and a weaker cost structure," says Moran. "You don't want to be half pregnant."

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