If Time Inc. does agree to sell, Rob Kindler is the man to do it.
The Morgan Stanley vice chairman and head of its mergers and acquisitions group was retained by Time over the summer for corporate strategy and the possibility that the publisher would receive unsolicited takeover offers. Time, which has undergone wholesale changes in its top executives this year, has been investing in new digital businesses in hopes of offsetting a long-running decline in print advertising.
Earlier this fall, Time also tapped Bank of America for banking advice.
Though Kindler, 62, may not be able to solve Time’s revenue challenges, he brings unparalleled perspective to the publisher, having worked with the company since the 1980s when it was led by Gerald Levin and media executives were hellbent on vertical integration, owning both content and distribution. If Time finds a new home for its roughly 100 brands including People, Fortune, Sports Illustrated, Entertainment Weekly and Time magazine, it’s likely it will be with a digital distribution company looking for content.
In an e-mailed statement, the publisher said that “As a matter of policy, Time Inc. does not comment on speculation about such matters.”
Kindler encountered a similar situation at Time Inc. in the late 1980s when he was a young attorney with New York law firm Cravath, Swaine & Moore, long the company’s outside legal counsel. Time hired Cravath to represent it in its pursuit of Warner Communications, owner of a large film and television production studio, a record company (vinyl, that is) and a book publishing business.
The Time Inc. of the 1980s was a powerhouse. With Levin as its sage, Time embraced cable TV, buying urban networks while investing heavily in Home Box Office, which had become the darling of a relatively young industry. Time’s magazines were among the best-known and most profitable in the country — if not the world.
But Levin’s Time was eager to get bigger, and buying Warner was viewed as a means to owning more content for the company’s cable TV business, the country’s second-largest. In March 1989, Time agreed to acquire Warner in a $15.2 billion merger that would become historic not simply because it created a powerhouse media company in Time Warner.
Rather, the deal may be best known in legal circles because Time prevailed in a landmark battle in the Delaware Court of Chancery, which ruled that Time’s directors had a legal right to reject an unwanted offer — in this case a $12.2 billion hostile bid from Paramount Communications — despite it being quite lucrative.
The ruling, with Cravath and Kindler playing a major role, gave boards greater standing when faced with the demands of activist shareholders, a decision that has had far-reaching impact on corporate law.
Time Warner hired Kindler again in 1996 when it paid $7.5 billion to acquire Ted Turner’s Atlanta-based Turner Broadcasting System, owner of TBS and CNN. The two networks were among the most popular on cable TV, with the former known as the country’s “Superstation” and the latter an ambitious news upstart.
For better or worse, Kindler also was present when Time Warner agreed to be acquired in 2000 by America Online in the stunning and still-hard-to-read $147 billion all-stock deal that has become more infamous with age. At the time, Merrill Lynch media analyst Jessica Reif Cohen called the deal “amazing,” telling Bloomberg News that “it guarantees AOL getting broad access to consumers [and] it takes Time Warner to another level as far as new media and high-speed data connections.”
Of course, Time Warner-AOL never reached new levels or mountaintops but instead was a disaster for shareholders and the hundreds of employees who lost their jobs as the long list of assumed synergies failed to materialize.
Later that same year, Kindler moved to JPMorgan Chase to become head of its M&A group in a shift to investment banking. Kindler’s move from legal was unusual but not unprecedented. Bruce Wasserstein, who founded TheStreet‘s sister publication The Deal in 1999, is one notable example, having started at Cravath before heading to First Boston in 1977 and later launching his own firm with Joseph Perella. Yet Kindler’s move did turn heads considering that he had been at Cravath for 20 years, making him a senior member of a major New York law firm.
A fellow Cravath partner, Lewis Steinberg, said at the time that Kindler has “done everything a lawyer can do. At the age of 46, I think he was ready for some new challenges.”
Steinberg himself, interestingly enough, made a similar leap to UBS in 2005 and then Credit Suisse Group five years later. He now is at Bank of America Merrill Lynch and is an adjunct professor at New York University.
At JPMorgan, Kindler handled a variety of deals, though his specialty was telecommunications, the media and a sector still known as the internet. He represented Comcast (CMCSA – Get Report) in its ambitious but ultimately losing effort to acquire Disney (DIS – Get Report) and Nextel Communications in its successful sale to Sprint (S – Get Report) .
Time Warner again came calling in 2008 after Kindler had moved to Morgan Stanley’s banking division and leadership of the media company had passed from Levin to Richard Parsons to Jeff Bewkes. Eager to streamline Time Warner, Bewkes spun out Time Warner Cable, assets that were originally combined in the 1989 merger.
That transaction handed Time Warner a $9.3 billion payout that Bewkes used to reinvigorate the company’s television and film production businesses. Kindler also worked for Time Warner Cable when Charter Communications (CHTR – Get Report) purchased the pay-TV operator in a $78.7 billion transaction that closed earlier this year.
And then, coming full circle, Kindler again was brought on board when Time Warner chose to accept an $84.5 billion cash-and-stock buyout offer announced in late-October from AT&T (T – Get Report) to become a wholly-owned subsidiary of the telecom giant. Some 27 years after Time Inc. merged with Warner Communications, the media conglomerate may soon lose its New York Stock Exchange listing.
As for Time’s legacy magazine business, Kindler worked with Bewkes to spin-out the publisher in June 2014 as a separately-traded stock after deal talks with Meredith (MDP – Get Report) of Des Moines, Iowa, failed to produce a change of ownership. The newly-independent Time no longer owned cable TV networks or HBO, its revenue having declined or tread water for more than two years.
Since going public, Time’s revenue stood at $750 million in the third quarter of 2016 compared with $820 million for the same period in 2014. Operating income dipped to $64 million last quarter whereas it totaled $100 million for the same period two years ago.
Sensing that Time’s stock was undervalued and its management in need of change, investment firm Jana Partners took a 5% stake in the company over the summer, prompting management to turn to Kindler and Morgan Stanley.
In September, Time’s board replaced Joe Ripp as CEO with Rich Battista, elevating an executive who only had been with the company for about 18 months. Battista then replaced finance chief Jeff Bairstow, on the job for three years, with Time comptroller Sue D’Emic, and on Tuesday, he elevated the head of its digital sales group, Brad Elders, 49, to the position of chief revenue officer, taking over from Mark Ford, a 32-year company veteran.
Time’s reorganization may be a last ditch-effort to turn the company around by leveraging its many brands on video platforms such as its newly launched free and ad-supported People Entertainment Network. Nonetheless, an investor group headed by Seagram’s heir Edgar Bronfman recently offered Time’s board an $18 per share buyout, according to a person familiar with the matter. The bid, which was rejected, was first reported by The Wall Street Journal.
If Time and Kindler are looking for a model for a sale of the company, they need look no further than AT&T’s pending acquisition of Time Warner. Just as Time Inc. merged with Warner Communications some 28 years ago to gain vertical scale, AT&T aims to do the same with Time Warner.