The magazine company will also significantly expand its licensing portfolio with the addition of Sports Illustrated, Sports Illustrated Swim, Marie Claire, Food & Wine and more.
NORTH AMERICA–Meredith has entered into an agreement to acquire all outstanding shares of Time Inc. and its brands (including Sports Illustrated and Food & Wine), further bolstering its media presence as well as supporting its position within the global licensing industry.
The transaction, which has already been unanimously approved by the boards of directors of Meredith and Time Inc., is valued at $2.8 billion and is expected to close during Q1 2018. In addition, Meredith expects the transaction to be accretive to free cash flow in the first full year of operations and anticipates generating cost synergies of $400 million to $500 million in the first full two years of operation.
In terms of licensing, Meredith is the world’ second largest licensor, reporting $22.8 billion in retail sales of licensed products in 2016, according to License Global’s annual Top 150 Global Licensors report. The company is known for its popular media brands such as Better Homes & Gardens, EatingWell, Shape and Allrecipes. Time Inc. does not appear on the Top 150 Global Licensors report; however, the company has developed a robust licensing programs for Food & Wine, Sports Illustrated, Sports Illustrated Swim and Marie Claire, among others, which will likely benefit significantly from the transaction. Time Inc.’s brands will also likely assist Meredith in retaining its position on the Top 150 Global Licensors ranking.
Through the transaction, Meredith expects to increase its consumer venue from diversified streams including brand licensing, bundled circulation activities, e-commerce, events, video creation, content management and marketing services.
Furthermore, Meredith’s acquisition of Time Inc. will allow it to apply its key brand licensing strategies to new brands. In May 2014, Elise Contarsy, vice president of retail brand development at Meredith, shared that the company’s three key points to its brand licensing strategy were: “Maintaining and growing businesses that are in place today, expanding the business to our broader portfolio and the ‘Bones of the Home’ strategy. Contarsy also shared that the “Bones of the Home” strategy is “everything about what helps the home function and stand up.”
Beyond licensing, the acquisition will see Meredith’s readership increase to 135 million and paid circulation increase to nearly 60 million. It will also see Meredith “transformed into a Top 10 digital media company” with 170 million unique monthly visitors in the U.S., over 10 billion annual video views and nearly $700 million in digital advertising revenues.
"We are creating a premier media company serving nearly 200 million American consumers across industry-leading digital, television, print, video, mobile and social platforms positioned for growth," says Stephen Lacy, chairman and chief executive officer, Meredith. "We are adding the rich content-creation capabilities of some of the media industry's strongest national brands to a powerful local television business that is generating record earnings, offering advertisers and marketers unparalleled reach to American adults. We are also creating a powerful digital media business with 170 million monthly unique visitors in the U.S. and over 10 billion annual video views, enhancing Meredith's leadership position in reaching Millennials."