Spin-Off

Time to form a new company

Time Inc. is best known as a communications company that publishes magazines and books and owns Home Box Office, the largest U.S. pay cable-television service. Since the early '50s, the company has also been in the forest-products business. It entered the field almost by accident, purchasing half a million acres of prime East Texas timberland as part of a long-term drive to find secure paper supplies for its magazines. The forest-products unit grew into a major producer of pulp and paperboard, although it never manufactured paper for the publications. In 1973 Time Inc. acquired Temple Industries, a large Texas producer of building products, and in 1978 it added Inland Container Corp., an Indianapolis-based manufacturer of containers and containerboard.

Now Time Inc. is leaving forest products. Last week, at the company's annual shareholders meeting, President J. Richard Munro announced a plan to form a separate company by splitting off the forest-products operations from the firm's other businesses. If stockholders approve the plan, which would give them shares in the new forest-products company, at a special meeting later this year, the move could be completed by year's end.

The spin-off should make it easier for each company to satisfy its own considerable capital needs. Said Munro: "At the moment, we inevitably have a continuing tug-of-war between widely different needs that have to be evaluated from distinctly different perspectives."

Time Inc. has made several major investments in communications during the past few years. In addition to its magazines, books and HBO, Time Inc. owns American Television & Communications Corp., one of the largest U.S. cable-TV companies. HBO last year joined with CBS and Columbia Pictures to form a new movie studio, Tri-Star Pictures. Last month the company launched its eighth magazine, TV-CABLE WEEK, which will provide system-specific listings for both cable and broadcast TV. Time Inc. is also experimenting with a teletext service for cable television. Time's teletext will be the official information service for the heads of government at this week's economic summit in Williamsburg, Va.

The forest-products firm, which will have its headquarters in Diboll, Texas, will be a major U.S. corporation on its own. Last year that part of Time Inc. accounted for $1.1 billion, or 32% of the company's $3.6 billion in revenues. If it had been an independent company, the forest-products operation would have ranked 270 on the FORTUNE 500 list. Munro said in announcing the proposal that separation means that the "major parts of Time Inc. can become greater than the whole." This file is automatically generated by a robot program, so viewer discretion is required.