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Time spinoff highlights risks for magazines

From Sports Illustrated to People to its namesake magazine, Time Inc., was always an innovator. But now when the troubled magazine industry is facing its greatest challenge, the company founded 90 years ago is struggling to find its way in a digital world.

Time Warner Inc.'s decision last week to shed its Time Inc. magazine unit underscores the challenges facing an industry that remains wedded to glossy paper even as the use of tablet computers, e-readers and smartphones explodes.

Although the new devices might seem to present an array of opportunity for Time Inc.'s 95 magazine titles, many publishers have found the digital transition troublesome. Digital editions of magazines represented just 2.4 percent of all U.S. circulation in the last half of 2012, or about 7.9 million copies, according to the Alliance for Audited Media.

The fact that so few tablet owners are buying magazines on their devices is a concern because both ad and circulation revenue from print editions have fallen more than 20 percent since their peak near the middle of the last decade. And, according to forecasts, there's no recovery in sight.

"We have to get much better at capturing those [digital] readers," said Mary Berner, president of The Association of Magazine Media.

For Time Warner, analysts say spinning off its magazines into a separate, publicly traded company reduces risk. On Friday, two days after the company announced the spinoff, its shares hit a 52-week high of $57.85.-- AP

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