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The Deal: New Time CEO Must Act Quickly

Stocks in this article: TWC MDP

NEW YORK ( The Deal) -- Just how eager is Meredith (MDP) to pounce on Time Inc.? The question raised itself Monday with the designation of Joseph A. Ripp as Time CEO, the world's largest magazine operation which is slated to get spun from Time Warner (TWX) by the end of the year.

The smart money has had Time Inc.'s top job going to Michael Klingensmith, who like Ripp is an alum of the organization, ever since parent company Time Warner Chief Executive Jeff Bewkes announced a magazine divestiture four months ago.

Klingensmith doesn't need a lot of money, and, besides, Time Warner was willing to pay plenty. Klingensmith, who's credited with turning around Star Tribune Media since becoming its CEO in 2010, spent the bulk of his career at Time Inc. in a series of jobs that couldn't be better designed for strategic leadership of a magazine empire. CFO of the entire organization? Check. GM of Time Magazine? Check again. And what about creative flair -- as demonstrated by being the co-founder of Entertainment Weekly? Yep, he did that, too.

So what happened? Those even remotely interested in the magazine industry will recall that, before committing to spinning itself off as a stand-alone, Time came this close to cutting a deal with Meredith. But with so many moving parts, as well as conflicts among various corporate, ownership and cultural interests, the proposition's unwieldiness wound up denying a timely yet universally satisfactory solution.

Besides, given it wouldn't be around to reap the massive synergies a deal would bring, Time Warner can be forgiven for thinking what's the rush. For Meredith, though, those synergies are still waiting. And given how far down the M&A runway previous discussions have already taken the two interested parties, there may not be much ground left to cover before liftoff.

As tax expert Robert Willens told the Deal at the time discussions initially fell apart: a merger could still occur -- even "shortly after" Time Inc. becomes a standalone -- and its terms wouldn't be restricted by the majority-ownership demands that appeared to thwart a tax-free transaction before Time Inc.'s official spin off. "I'm thinking the merger is just as likely now as it was a couple of days ago," Willens said.

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