Many analysts have questioned how the Meredith Corporation could afford to buy a business as big as Time Warner‘s non-news magazine titles.
After all, Meredith’s market value as of Wednesday evening was about $1.6 billion. Time Warner’s publishing arm reported about $3.4 billion in revenue last year.
The rub is this: What’s being discussed isn’t a sale, but the formation of a new joint venture.
Time Warner and Meredith are each expected to contribute substantially all of their magazine titles to a new joint venture, people briefed on the matter told DealBook on Wednesday. That would leave Time Warner as primarily a film and television company, though still holding onto titls like Time and Fortune, and Meredith a broadcast television concern.
What would be created is a publicly traded assemblage of Time Warner publications like People, widely considered one of the most lucrative magazines around, and Meredith titles like Better Homes and Gardens. Shareholders of both conglomerates would be given shares in the new joint venture.
The two media companies are still discussing a number of important details, including how much of the new company each of their shareholder bases would own, as well as whether the joint venture would pay a dividend.
They are also discussing whether the new company would provide back-office services to the titles that Time Warner plans to keep, which also include Sports Illustrated and Money, these people said.
If the transaction is completed, it would be the most significant deal in Meredith’s roughly 111-year history. The biggest that the media conglomerate has struck to date is its 2005 purchase of Gruner and Jahr’s ! women’s magazines, including Family Circle, Parents, Child and Fitness, for $350 million.
