Time Life: The last digital holdout

September 27, 2010, 7:18 PM UTC

Get your box set via P.O. Box! With dusty product offerings, outdated formats, and an aging demographic, the privately-owned company has nowhere to go but the selling block.

If you’re up at night channel-surfing around the tube, you’ll still see them: half-hour infomercials of softly-lit couples, hand-in-hand, running on the beach, or peppy teens in varsity jackets pulling into a drive-in, peddling 10-disc compilations like “Malt Shop Memories,” “Flower Power,” or “Ultimate Love Songs.”

In an age where retail businesses live or die depending on how they adapt to digital media, Time Life remains a precious anomaly. The purveyor of nostalgic merchandise, sold by Fortune parent company Time Inc., to private equity firm Ripplewood Holdings and ZelnickMedia, an investor group, in 2003, continues to market and sell collections of vintage media in dying formats. While it does have a Facebook presence, Twitter stream, website, and blog, the company has yet to plant both feet in the 21st century.

Care for that Patsy Cline box collection in your iTunes? Too bad. There are no digital downloads — only CD and DVD sets sent via snail mail. There are no alternative methods of payment like BillMeLater or even PayPal, either — just credit cards. It’s as if all the technological advancements of the past decade never happened.

In the beginning

Founded in 1961 and based in Fairfax, Virginia, Time Life was originally intended to serve as Time Inc.’s book division, selling mostly history and Do-It-Yourself books. But by 1966, merchandise shifted to include music and video offerings, like the kind of sentimental collections the company became synonymous with.

In 2003, Time Inc. sold the division to Ripplewood and ZelnickMedia, which did not respond to our request for comment. At the time, Zelnick Media partner Jim Friedlich said that Time Inc. approached the two companies specifically about the sale.

“This wasn’t an auction situation,” he told The Deal. “They wanted to do a deal with us.”

At the time of the sale, the company pulled in an estimated $350 million in annual revenue, but it was unprofitable, reportedly losing more than $50 million a year. The terms remain undisclosed, but several media outlets reported the transaction consisted of a cash payment as well as an annual royalty fee paid to Time Inc., which did not respond for comment, contingent upon future performance. As part of the agreement, Ripplewood and ZelnickMedia also got exclusive worldwide rights to use the “Time Life” brand for products and marketing. (While the storied Time Life name survives, the company is legally known as Direct Holdings Americas, Inc.)

“We’ll continue to focus on music compilations and video, but we’d like to see Time Life return to the book business,” said Ripplewood then-vice president Saguna Umerjee to Buyouts Magazine.

Actually the opposite happened. Time Life permanently shuttered its book division soon after the acquisition and outsourced operations like customer service, order processing and distribution to third-party companies in Iowa, Pennsylvania and Kentucky. In 2007, Ripplewood acquired the beleaguered Reader’s Digest Association — which would later go in and out of bankruptcy protection –for $2.4 billion and merged it with Time Life.

Since then, Time Life has made tentative baby steps online, but it continues to market its core business of nostalgic products via traditional — some might say, antiquated — distribution channels.

The nostalgia business

According to executive vice president Chris Hearing, there’s a good reason for staying the course. The typical Time Life customers are Americans between the ages of 50 and 60 who reminisce about the music and TV that permeated the airwaves during high school and college. And as new generations of baby boomers arrive, Time Life adjusts its product line accordingly.

“They’ve grown out of ‘40s music and are now into the ‘60s,” says Hearing.

Even as Blockbuster files for Chapter 11, and Barnes & Noble considers a sale, Time Life doesn’t see the immediate need to go all-digital. Hearing feels the average Time Life customer, who grew up with traditional media, is more comfortable with CDs and DVDs than .mp3s, AACs, and AVIs.

“We find our consumers aren’t in the demographic where downloading is a big part of their lives,” he says. “I certainly expect that to change, but for right now, physical packaging is the main part of our business.”

While it’s possible that strategy continues to serve the company well, the big question is: for how long? Hearing won’t discuss Time Life’s numbers, but he says revenue sales have been steady, if not growing, across time.

Gary Singer, CEO of branding firm Buyology, thinks Time Life has five years, 10 at most, before digital becomes impossible to ignore. He points to Blockbuster’s situation as an example.

“That one’s been predicted for at least 15 years, and I’d say the same thing is true of Time Life,” he says. “But I think the advantage Time Life has versus Blockbuster is that its brand legacy is stronger than Blockbuster’s, so they’re getting more tailwind among the 50-plus demo.”

Inevitably, the day will come when the majority of Time Life’s demographic will be comfortable enough with digital products, where they won’t approach music or video-streaming services with trepidation, but a modicum of comfort.

Of course, by then, Time Life may already be under the umbrella of the next interested owner, and the company’s “golden oldies” could include — god, forbid — “classics” like Ke$ha’s “Tik Tok.”