In Depth

Time Warner Said in Talks to Sell Most of Time Inc. -- Bank Said to Be Involved Has Ties to Warren Buffett

By Nat Ives, Matthew Creamer
Advertising Age

Time Warner is in talks to sell a large portion of its Time Inc. magazine division, including People, InStyle and Real Simple, according to a report Wednesday afternoon by Fortune.

Fortune is itself a Time Inc. magazine but reported that it isn't part of the deal being discussed. Neither is the flagship Time or Sports Illustrated, Fortune said. People is a huge profit center and the crown jewel in the portfolio.

A spokesman for Time Warner declined to comment. Spokeswomen for Time Inc. and BDT Capital Partners, a bank reportedly involved in the talks, did not immediately return calls.

Speculation immediately turned to the identity of the potential "serious buyer" mentioned but not named in the article. BDT Capital is run by Byron Trott, a former Goldman Sachs executive known for a relationship with Warren Buffett, who has been making counterintuitive publishing investments lately in the form of newspaper acquisitions. Mr. Trott was a key player in Mr. Buffett's investment in Goldman Sachs in 2008.

Former Time Warner CEO Dick Parsons once told a "town hall" meeting of 400 staffers about a conversation he'd had with Mr. Buffett -- according to a 2007 report in Ad Age about speculation over a Time Inc. sale.

"As your friend, don't do that, it's a good business," said Mr. Buffett, according to people who heard Mr. Parsons tell the story. "But," he added, "if you do sell it, sell it to me."

Reached by phone, a representative for Mr. Buffett's Berkshire Hathaway asked to receive questions by email but did not immediately reply.

Time Inc. has been the subject of spin-off and sale rumors for years as its results have lagged Time Warner's more lucrative TV and movie entertainment businesses. Time Warner CEO Jeffrey Bewkes has never taken the option off the table.

Time Inc. CEO Laura Lang, who arrived from digital agency Digitas a little over a year ago, has been trying to improve the publishing operation's results with an initial review to identify priorities, helped by Bain consultants; new digital ad products and a new emphasis on video; and layoffs last month of about 500 employees.

Berkshire Hathaway is best known for its ownership of insurance companies like Geico and iconic American brands like Dairy Queen, Benjamin Moore and Fruit of the Loom. Mr. Buffett has also made investments in Procter & Gamble, Coca-Cola and other big advertisers. In 2008, he sank $5 billion in Goldman Sachs -- a massive, confidence-inspiring bet on the ailing financial system.

Though not as well known, Mr. Buffett has dabbled in media for some time, though all his bets have been on local newspaper, not magazines. He purchased the Buffalo Evening News in 1977 and added the Omaha World-Herald in late 2011. Last year, Berkshire Hathaway subsidiary BH Media Group bought the bulk of Media General's newspaper division for $142 million, leading The Wall Street Journal to speculate on whether Mr. Buffett was "a budding media mogul."

Indeed Mr. Buffett fueled that sense with a letter to the editors and publishers of his new holdings promising more newspaper purchases. Later that month, he made good on that prediction with the purchase of the Greensboro (N.C.) News & Record.

Mr. Buffett has often contributed his business insights to Fortune and has long known Fortune Editor at Large Carol Loomis, who has often interviewed him. Last year, she compiled his Fortune wisdom into a book called "Tap Dancing to Work."