Can Time Inc. make it alone?

When Time Warner announced in early March its plan to spin off the Time Inc. magazine unit by the end of 2013, financial analysts and the business press expressed broad agreement on the prospects for the two future entities. For the new Time Warner, the prevailing view was highly positive: The split is the next logical step in solidifying a pure-play television and motion picture colossus after the spinoffs of AOL and Time Warner Cable four years ago, and with CEO Jeff Bewkes shedding the drag of magazines and sharpening his focus on a stable of growing businesses, his record of enriching shareholders seems bound to keep rolling.

For a newly independent Time Inc., the 91-year-old publisher of Time, Sports Illustrated, People, and dozens of other titles, including Fortune, the general opinion was downbeat: Unlike Time Warner, which grew operating earnings in its nonpublishing businesses by 4.7% last year, the magazine business needs radical change. Put simply, revenues and profits for Time Inc. and the magazine industry as a whole are shrinking.