It was an elite reception at a glittery Manhattan setting: prominent media figures gathered on the 10th floor of the Time Warner Centre on Monday night to toast Sheryl Sandberg, the Facebook executive who recently released a book about her life.
But another executive was drawing a crowd of his own: Richard Stengel, Time magazine's managing editor. Throughout the evening, well-wishers made their way through the crowd to wish him well as Time Inc plans to separate from its parent company, Time Warner, and strike out on its own.
Only days before, Time Warner announced that it was spinning off its struggling magazine division, after failing to reach a deal to sell many of Time Inc's magazines to the Meredith Corporation.
The high-wattage party seemed like just the kind of lavish expense that Time Inc might have to leave behind as it confronts the financial challenges buffeting the publishing industry.
The magazine company is expected to start with $US500 million to $US1 billion in debt, in contrast to the publishing company that News Corp will spin off in a few months, which will have no debt.
Circulation and advertising revenue at Time Inc have suffered sharp falls. In the three months that ended December, revenue fell 7 per cent, to $US967 million, while revenue at Time Warner's cable channels has soared. After the split occurs, Time will no longer have the lucrative film and television assets to prop it up.
"It's sort of put-up-or-shut-up time," Stengel said. "I think great, let's really test that hypothesis that people will pay for great content and great journalism. We can now invest our own capital."
Time Inc executives hope they can build a company that can pour its profits into helping its magazines make the transition into the digital age, rather than hand them back to the parent company. They also hope that their new independent structure will let them restore the journalistic vision created by founder Henry Luce.
Analysts tracking the magazine industry point out that even though Time Inc's profits have fallen in recent years, the newly created company will remain by far the biggest player in the business. On its own, Time Inc generates a quarter of the revenue produced by the nation's top 50 magazines, according to data tracked by John Harrington, a magazine industry consultant.
He said that Time owned four of the nation's top 10 revenue-generating magazines: People, Sports Illustrated, Time and InStyle. Together they produce $US3.1 billion of the $US6.379 billion generated by the nation's top 10 grossing magazines, he estimated. People alone brings in $US1.4 billion.
The announcement of the spinoff last week at least provided some clarity to nervous Time Inc employees. In January, the company said it would lay off 6 per cent of its global workforce, about 500 employees. Two weeks later, Time Warner announced it was talking to Meredith, leaving those who had kept their jobs to await word of their fate, and whether they might have to move to Meredith's headquarters in Iowa.
Don Logan, chief executive of Time Inc from 1994 to 2002, noted just how challenging a task it was to transform a print magazine division for the digital age, even for a company with such strong brands.
"It's not an easy company to manage," Logan said. "It's hard to balance this."
Employees hope that as an independent company they now will be able to invest more in digital publishing, where they recognise they have plenty of catching up to do. Data provided by comScore shows that many of Time Inc's websites experienced falls in unique users in the past year.