Shares of Time Inc., the entity housing Time magazine and nearly 100 other publications, sank on the company's first day of trading, signaling what's likely to be a hard road ahead for the print publications.
At times dipping as far as 7 percent, the shares were down 3.6 percent to $22.63 at 12:46 p.m. They were outcompeted by those of now-former parent company Time Warner, which spun off the once-powerful magazine business "with little ceremony and a load of debt,"
according to The New York Times.
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Shares of Time Warner, which owns the Warner Bros. movie studio, rose 1.3 percent to $69.02,
Bloomberg reported.
Trading under the stock symbol "TIME," Time Inc. now goes it alone with $1.3 billion in debt; $600 million will go toward a one-time cash dividend to Time Warner shareholders.
Joe Cornell, a media analyst with Spin-Off Advisors, said "there will be a meaningful amount of sellers" as shareholders unload, predicting that it could take months for the shares to go anywhere. "It’ll just take time," he told Bloomberg.
Time Inc.'s debt has been rated at less than investment grade by Moody's because it is roughly three times its earnings.
Since 2006, when Time was pulling in $1 billion, earnings have dropped to $370 million.
With unrivaled name recognition, Time magazine itself remains profitable, but investors and Time Warner’s chief executive, Jeffrey L. Bewkes, ultimately found the 90 magazines and 45 websites in its portfolio — which includes Sports Illustrated, People, and Fortune — unnecessary to the larger Time Warner conglomerate.
Joseph A. Ripp, 62, was hired as chief executive of Time Inc. in September, and is tasked with steering the newly freed business.
"What this company needs is new ideas, and I haven’t heard any coming out so far. They are highly leveraged, and leverage can be a good thing if you are growing, but that hasn’t been that story here," former Time Inc. employee Michael Nathanson, a MoffettNathanson analyst, told The New York Times.
In the meantime, company leaders have met with head editors at many of the publications, telling them they were expected to make significant cuts in coming months — including 25 percent of editorial costs.
As part of the cost-cutting measures, the company will also leave the Time & Life Building in New York's Rockefeller Center, where it was housed for more than 50 years, in favor of new offices further downtown.
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