Turner, Time Inc. Execs Got The SI.com Deal Done; Now About Making It Work

We all have personal soundtracks. Mine started playing Maybe This Time soon after I got off the phone with the top executives responsible for crafting the Turner/SI.com deal between Time Warner (NYSE: TWX) siblings Time Inc. and Turner Broadcasting — and for making it work. Not that Mark Ford, Terry McDonell and David Levy are singing a torch song. Far from it. They’re in that wonderful stage of deal exuberance, when everything makes sense and it all seems not only possible and plausible, but probable. The stage where the soundtrack is by The Turtles.

Why are they so psyched? For Levy, president of sales, distribution and sports, Turner Broadcasting System, Inc., it’s a deal no one else has managed to do: Move the traffic and other digital assets of Sports Illustrated into Turner Sports without the magazine. Ford, president of Time Inc.’s News & Sports Group, gets a guaranteed annual payment for Time Inc., and McDonell, editor of the SI Group, keeps editorial control on a bigger digital stage. Ford and Levy explained the deal during a joint interview with paidContent; McDonell spoke soon after on a separate call.

Why do they think it will work now? As I pointed out in an earlier post, Time Inc, SI and Turner have been down versions of this path before with CNN/SI. They’ve also talked versions that never made it — usually because at least one party believed the franchise needed to stay intact. But Levy and Ford say these are different days; the corporate culture is more favorable and the goals are better fits.

Levy explained: “Look at what’s in our arsenal today, then what was in our arsenal years ago. Look at the content we’ve built. Look at the digital strategy that Turner has today.” Turner manages digital for Nascar.com, PGA.com. PGATour.com, Yahoo (NSDQ: YHOO) NBA, Golf and Nascar sections, and soon some of the NCAA. Both think SI.com will benefit from access to the assets that comes with those deals and other sports packages. That’s access SI couldn’t manage on its own, says Ford, and makes it more competitive.

“We’ve spent the last six-seven years building out SI.com, building out our business beyond just a magazine company to a sports media company,” Ford adds. “We’ve done a really good job but we’ve got to move to the next level.” Ford thinks working with the Turner team can do that. From the start, SI.com gets scale: Ford says preliminary estimates give SI.com, Golf.com and the other connected sites an instant jump from #6 on *comScore* to #1, to 40 million uniques from 13 million. McDonell likes those odds better: “Mark says we’ve been punching over our weight for a while. This means that the wallop is really there.”

How does this not confuse advertisers? Ford said 65 percent of SI’s business has some element other than print. Under the deal, Turner will sell digital and TV, Time Inc/SI will sell print and some digital. “How we make sure that we don’t confuse advertisers? We’ve got great expertise about television over at Turner. We’ve got great digital-only expertise, and what we’re going to do is work with them to approach marketers with a program that is in collaboration with Turner in television and digital.” No one is going to try to force a package across all the platforms, but Levy said his team will help make it happen when advertisers want print. “I’m not sitting here in every single package in every single deal looking to do extensions to the magazine. That’s not what we’re here for.” Ford says SI has been media agnostic in its sales for years, not insisting that print be part of every deal.

At the same time, Ford says the demand for integrated sales is part of what’s pushing the deal. “The timing’s gotta be now, especially with what’s happened in consolidation in sports and Comcast (NSDQ: CMCSA) and NBC. We had to do this now and it’s going to work great. Also, culturally, I think we fit. … Our goals are aligned.” Turner gets an opportunity it’s never had, says Levy — the ability to sell in the general sports marketplace for a general sports destination and to sell for 52 weeks a year, instead of living by the calendar of seasonal sports.

How will the mobile split work?: The editorial control still stays with SI but Turner gets custody of all the ad-supported-only apps, while SI retains paid apps like the iPad. That follows the general shape of the deal, with SI keeping the subscription print business. Where I see cloudy with a chance of meatballs, they see simple and easy. “Will Terry turn a free SI app to a paid just because of some internal arrangement? No way,” says Ford. McDonell will produce a mobile road map to share with Turner. “We’re going to continue to develop applications in the same way,” McDonell said, adding that the “very generalized language” is “meant as guideposts.”

Levy’s take? “Sports Illustrated has been a subscription model and a subscription business. They’re going to continue that subscription business on different applications. However, there is a lot of free content that is ad-supported and will continue to be ad supported and Turner will manage.” What happens to freemium offerings like the swimsuit app? That’s one of the questions they need to work through. This is 99 percent clear and easy. I think you’re asking a 1 percent situation that may not be clear and we’ll get to that when it happens.”

What about the magazine?: Rather than weakening the magazine, Ford argues that the move puts Time Inc in a position to help it grow. “We’re having a good year this year. We’re growing again. The sub side is strong. Consumer satisfaction is at an all-time high. We feel really good about our circ net and now that we’re going to have some scale on the digital side and work with David’s team, the magazine’s going to get more promotion. It all comes down to we’ve got to execute on that strategy.” Asked what it means for SI editorially, McDonell replied: “It just gives us much more firepower, more resources on various levels.” He cited the rights deals and access to video. “At the same time, our ability to make our writers more well known and to spotlight the work we do across various Turner platforms can only be a positive.”

What’s next?: Ford has said he’s interested in exploring opportunities for Time, Fortune and other Time Inc titles. Are they talking to Turner about more deals? “We’re always looking for partners and we’re always looking to expand Fortune in television. We’ll look at more scale for all of our properties, certainly at Time.com. They get more than favored nation status. We’d love to expand that relationship deeper.”