The Kochs are inching closer to becoming media moguls

Four years ago, Charles G and David H Koch seemed poised to control some of the country’s biggest newspapers. Known for using their vast wealth and network of donors to advance their brand of libertarian-infused conservatism, the titans of Koch Industries explored buying the Tribune Company’s eight newspapers, including The Los Angeles Times and The Chicago Tribune.

They ended up not making a bid, and in an interview at the time with his hometown paper, The Wichita Eagle, Charles Koch suggested that Koch Industries was rethinking whether it was wise to enter such a troubled industry.

“There are tremendous changes going on in media,” Charles Koch said. “We’re back at square one, analysing where is the most change, where are the best opportunities for new entrants to come in and add value?”

The answer, it appears, was the magazine business.

In a move that came to light on Wednesday, the Kochs have tentatively agreed to back an offer by the magazine publisher Meredith Corporation for Time, the owner of titles including Time, People and Sports Illustrated. Koch Industries, the sprawling industrial conglomerate controlled by the two brothers, plans to support the deal.

Meredith and Time have discussed the details of a potential transaction over the last week and are hoping to announce a deal, should it occur, on the Monday after Thanksgiving. Under the preliminary terms of Meredith’s proposal, the company would pay $18 to $20 a share for Time, people involved in the talks said.

Meredith, the Iowa-based company behind popular monthly magazines like Family Circle and Better Homes and Gardens, has arranged for a $600 million cash infusion from the Koch brothers through their private equity arm, Koch Equity Development, these people said. Under the terms of the proposal, Koch would receive preferred shares in the company.

According to people involved in the talks, Meredith has also lined up $3 billion in financing from four banks: Citibank, Barclays, Credit Suisse and Royal Bank of Canada. Meredith has been busy lately reviewing Time’s financials, which have become somewhat complicated, because the company had been in the process of selling several magazines including Sunset and Golf and a stake in Essence.

Meredith has indicated that it would acquire all of Time’s properties, but was still seeking clarification about the status of those sales, these people said.

The Kochs have long tried to shape political discourse through their support of nonprofit organisations, universities and think tanks. Beyond their flirtation with Tribune, they have expressed little interest in running a media company.

Some Koch allies suggested that the brothers’ investment would be passive and would not give them any operational control over the company. These people said that the Kochs saw a potential moneymaker in Time, rather than a megaphone for advancing their free-market ideology. For that to happen, the storied company, which Henry R Luce helped found in 1922, would have to morph into an entity able to thrive in the fraught 21st-century media business.

Other Koch associates, however, surmised that the Kochs’ involvement in the possible deal was partly driven by their desire to advance their views. Should Meredith succeed in acquiring Time, Koch Industries would have a stake in a company with access to millions of online and print readers.

“Knowing the Kochs, I think they’d have to see it as a business that could at the same time further their political interests,” said Stanley S. Hubbard, a longtime associate of the brothers and a donor to their advocacy groups.
 

Although it now has a diminished role in the crowded landscape, Time magazine, with its influential Person of the Year and Time 100 issues, still reaches a weekly paid audience of roughly three million.