Time Warner Inc said Wednesday that it will spin off the magazine unit behind Time, Sports Illustrated and People into a separate, publicly traded company by the end of the year, ending a media marriage that has lasted more than two decades.
CEO Jeff Bewkes said in a statement Wednesday that the decision to split off the Time Inc magazine company will give Time Warner "strategic clarity" and enable it to focus on its TV networks including TNT, HBO and CNN, and its Warner Bros studio, which produces movies and TV shows.
He said the move would create value for shareholders, similar to the company's previous spin-offs of Time Warner Cable and AOL.
In recent weeks, Time Warner had been in talks to combine all of Meredith Corp's magazines with Time Inc's lifestyle titles such as People, InStyle and Real Simple.
But talks broke down over a value for the combined company and over which magazines from Time Inc would be included in the mix, according to a person familiar with the matter. The person was not authorised to speak publicly and spoke on condition of anonymity.
Meredith said Wednesday that it respected Time Warner's decision and hoped to work with it on future opportunities.
Des Moines, Iowa-based Meredith publishes magazines aimed at women such as Better Homes and Gardens, Fitness and Family Circle.
Analysts have estimated that the Time Inc division is worth around $2.5 billion.
Time Warner said the spin-off would be tax-free to its shareholders.
The move completes the years-long unwinding of a media and telecoms giant that reached its peak size in 2001 when America Online, an Internet access company, used US$147 billion worth of inflated stock to buy Time Warner, in what has been regarded as the worst corporate merger of all time, because expected company synergies never materialised.
On Wednesday, Time Warner's market value was about US$52 billion.
Over the years, Time Warner moved to spin off the cable TV hook-up business as well as AOL in order to focus on its profitable and growing TV and movie businesses.
Time got its start in 1922 when Henry Luce and Briton Hadden quit their jobs at the Baltimore News and found 70 investors to put up US$85,675 to start the magazine, according to a company website.