New reports that Time Warner will dump Time Inc.

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There have been rumors for several months that Time Warner (NYSE: TWX) will sell or spin out its magazine unit, Time Inc. which was founded in 1923. In the first quarter of the year, the division lost $33 million as revenue fell 23 percent to $806 million. With advertising pages at some of its largest magazines running down over 20 percent, the results may not get better this year.

Time Warner appears to be ready to retool itself as a film production and network content business. It has already spun-out Time Warner Cable (NYSE: TWC) and will go through a similar transaction with AOL at the end of this year.

According toThe Wall Street Journal, "There's a whisper that Time Warner is talking with investment bankers about options for divesting its magazine unit, the publisher of Time, Sports Illustrated and People." If the unit is sold, it will probably reflect the belief that TWX management has that magazines are going the way of newspapers.The gamble of divesting the unit would be based on a projection that print advertising in all of its forms is dying and that the internet units being built by publishing houses will be too small to offset the drop in traditional revenue.

Time Inc. is the world's premier magazine group and because of its powerful brands it might fetch a price not justified by its financial performance. If Time Warner can get an unusually large premium before earnings at it publishing unit fall further, it probably will.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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