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Meredith, based in Des Moines, is a Midwestern publisher through and through. Its founder, Edwin Thomas Meredith, entered the media business in 1902 with a magazine called Successful Farming. He soon began the still-thriving Better Homes and Gardens, which has a circulation of more than 7 million.
Its popular magazines have long focused on families and women, taking aim more at Middle America. It has eschewed an expensive headquarters in Manhattan and maintained a diversified portfolio — the company also owns local television stations — that has allowed Meredith to better weather the economic storm that has faced print publishers.
But as Meredith has stood relatively strong, Time Inc. has stumbled. The company failed to keep pace as the industrywide transformation from print to digital rendered old methods of magazine-making obsolete and publishing companies crumbled under the pressure of declines in print advertising and circulation.
For Meredith, a hardy company with a loyal print readership, the acquisition of Time Inc. represents a long-elusive victory.
“This is a transformative transaction for Meredith Corporation,” Tom Harty, Meredith’s president and chief operating officer, said in the company’s statement announcing the agreement.
Charles Koch, the chief executive of Koch Industries, and David Koch have long sought to shape political discourse through their support of nonprofit organizations, universities and think tanks. But in its announcement of the deal, Meredith said that the private equity fund, Koch Equity Development, would not have a seat on Meredith’s board of directors and would “have no influence on Meredith’s editorial or managerial operations.”
Steve Lombardo, a spokesman for Koch Industries, also said that the Kochs had no plans to take an active role in the expanded company. “This is a passive financial investment made through our equity development arm,” Mr. Lombardo said. The company’s role in the transaction, he said, was similar to that of a bank.
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Mr. Lombardo said the company is constantly evaluating investment opportunities.
“We’re looking at deals across all sectors, all industries,” he said. “This just happened to be one that made sense.”
A deal between Meredith and Time Inc. fell apart in 2013 after Meredith reportedly said that it did not want to acquire some of Time Inc.’s best-known titles, including Time, Fortune and Sports Illustrated. Meredith also expressed interest in buying Time Inc. earlier this year before it walked away — in part because it could not secure sufficient financing. The Kochs helped the company overcome that problem.
Adding Time Inc.’s portfolio will give Meredith even more national scale, which will help it continue to appeal to advertisers on both the print and digital sides. But the company will also have to adjust to printing weekly titles, which it currently does not do. Meredith said it expected its deal for Time Inc. would result in $400 million to $500 million in cost savings in its first two years.
In a note to its staff members on Sunday night, Rich Battista, the chief executive of Time Inc., said he believed in “our strategic transformation plan and in our ability to write the next great chapter of this storied company.”
“That said, as a publicly traded company, and one operating in such a dynamic industry as media, we know circumstances can change quickly,” he said. Meredith, Mr. Battista added, “presented us with an opportunity to combine companies to create even greater scale and financial flexibility.”
Under the terms of the deal, Meredith will pay $18.50 a share for Time Inc. The boards of both companies finalized the deal on Sunday evening. The deal is expected to close in the first quarter of 2018.
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The investment from the Kochs, Meredith said, “underscores a strong belief in Meredith’s strength as a business operator, its strategies and its ability to unlock significant value from the Time Inc. acquisition.”
Some Koch allies have suggested that the brothers would view their investment purely as a moneymaking opportunity. But others familiar with the Kochs’ thinking speculated that they could nonetheless use the media properties — which reach millions of online and print readers — to promote their brand of conservatism. The investment would also give the Kochs a way to combine the arsenal of voter information held by a data analytics company controlled by their network, i360, with the publishers’ consumer data.
After Time Warner, the home of HBO and Warner Bros., spun off Time Inc. in 2014, the publisher was left to fend for itself in a world increasingly turning its back on print media. Bedeviled by relentless cost cuts and executive turnover, the company has struggled to articulate a business strategy less focused on the printed page.
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Mr. Battista, who was named Time Inc.’s chief executive last year, and the new chief operating officer, Jen Wong, embarked on an aggressive strategy to increase digital revenue, including enhancing advertising technology capabilities and offering customers paid services, such as insurance for pets and a food and wine club. The company had also earmarked $400 million in cost cuts.
Time Inc. executives had been adamant that their stand-alone strategy could position the company for a successful future. But in an industry that increasingly values size and breadth, Time Inc. was staring into ongoing uncertainty. For its most recent quarter, it reported a 9 percent drop in total revenue compared with the same period last year, and a 12 percent decrease in advertising revenue.
Mr. Battista is expected to stay on at Time Inc. through the close of the deal, after which he will leave the company.