Media Sector Consolidation Continues as Meredith Corp. Buys Sports Illustrated (and TIME Inc.)

The Meredith Corporation (MDP) acquired Sports Illustrated and Golf Magazine (and the balance of TIME) for $2.8 billion ($18.50/share); after failing to acquire the company earlier this year (and an initial attempt back in 2013). The acquisition gives the Better Homes and Gardens publisher 200 million consumers across all platforms. There is speculation that with the addition of TIME’s publishing assets, MDP could spin off its broadcasting assets (including the newly-launched SI TV). Koch Equity Development is backing the Meredith bid with $650 million in financing.

Howie Long-Short: At $18.50/share, MDP paid a 9.5% premium on the price ($16.90) at Friday afternoon’s close and a whopping 46% premium over the closing price on November 15th. Earlier this month, TIME reported that Q3 revenue declined 9.5% (to $679 million); the 6th straight quarter the company missed Wall Street expectations. Magazine revenue, which still accounts for roughly two-thirds of all company revenue, was down 17% (to $1.3 billion) over the first 9 months of the year.

Fan Marino: Meredith clearly foresees a future for the magazine industry, but it’s Sports Illustrated that received recent acclaim for its fortune-telling prowess. Back in 2014, when the Astros were among the worst teams in baseball, SI published an issue predicting the team would win the World Series in 2017; with George Springer on the cover. Fast-forward 3 years, the Astros are WS Champions and George Springer was the World Series MVP.

Meredith, backed by Koch brothers affiliate, to acquire magazine publisher Time

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Author: John Wall Street

At the intersection of sports & finance.

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