Time Inc. to Buy Out Essence
Monday, January 3, 2005
Sale Signals End of Black Ownership of Media Firm
Time Inc., which owned 49 percent of Essence Communications, publisher of Essence magazine, has signed a non-binding agreement to acquire the rest of the company, the parties announced today.
Terms of the deal were not disclosed.
The announcement signals the end of black ownership of another media company. Most famously, the parent company of Black Entertainment Television was sold to Viacom for nearly $3 billion in 2000, in the process making BET founder Bob Johnson America's first African American billionaire.
Johnson later told the William Monroe Trotter Group of African American columnists that the days of "100 percent black-owned anything" were just about over and that the role of black businesses would become that of "black value drivers" -- delivering a black audience to larger, white-owned companies.
In today's announcement, Ann Moore, chairman and CEO of Time Inc., said, "We've been delighted with our investment in Essence Communications and our overall relationship with them. It's a terrific company with a great deal of talent and a wonderful brand. There has always been a mutual understanding between us that if they ever wanted to sell the remaining interest, we wanted to purchase it. So, we're especially pleased with this development."
And Ed Lewis, chairman and CEO of Essence Communications and publisher of Essence magazine, said, "Time Inc. has distinguished itself by recognizing the impact of African-Americans on a global scale, and their influence within the cultural landscape. Thanks to our partnership with Time Inc., Essence Communications is a stronger, more competitive publisher. Once the deal has been approved and we become a full-fledged member of the Time Inc. family, we're looking forward to aggressively broadening the scope of the Essence brand and penetrating new markets around the world. It will give me great pride and comfort to know that Essence will be secure for generations to come and that its prospects for even greater success will be brighter than ever."
In a March 2001 piece by T. Shawn Taylor in the Chicago Tribune, Lewis stressed Essence's retention of 51 percent of the business in explaining why he was partnering with Time.
"Lewis approached Time Warner after learning the conglomerate was interested in purchasing Vibe and Spin magazines. Essence was interested, too, but Lewis knew he could not compete against the media giant," Taylor wrote.
"'Then it dawned on me. Maybe we can work together,' he said. 'People probably didn't understand and even suggested we had sold out. That's why I stress the importance that we're retaining 51 percent ownership. We are still majority owners of Essence. The reason Time Warner is interested in Essence is they are interested in the editorial view of the magazine. They are not there to change it.
"'We didn't have the kind of financial resources available to do a number of things. They have so many avenues to partake in.'"
Today's announcement said that, "After the transaction is completed, as non-executive Chairman and Founder of Essence, Lewis will continue to promote the Essence brand by representing it with advertisers, professional organizations and at industry and advertising events. Michelle Ebanks, currently Group Publisher, will become President of Essence Communications.
"The closing of the transaction is subject to the negotiation of definitive agreements and customary closing conditions, including any necessary regulatory approvals and the approval by Time Warner's Board of Directors."
Essence magazine was founded in 1970 and claims a monthly circulation of more than 1 million, 29 percent male. The company also publishes Suede, a new multicultural fashion and beauty magazine; books and other spinoffs; and it stages a music festival.
The Company He Keeps (Kevin Merida, Washington Post, Dec. 17, 2000)
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