Budget cuts force military jets to drop air shows

SAVANNAH, Ga. — Deep budget cuts in Washington mean military flight teams will likely be no-shows at air shows across the U.S. starting this spring, leaving dozens of host cities bracing for thinner crowds and lost tourism dollars.

When $85 billion in automatic cuts kicked in March 1, the Air Force canceled shows at bases from Florida to Arizona and grounded its formation-flying pilots, the Thunderbirds. The Army's Golden Knights parachute team also canceled performances. The Navy's famous Blue Angels said only that military commanders intend to cancel their April shows, though nothing is officially canceled yet.

John Cudahy of the International Council of Air Shows says at least 150 U.S. air shows each year count on military performers. Without them, he estimates up to a third of the shows might cancel altogether.

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Reports: Harvard secretly searched deans' emails

CAMBRIDGE, Mass. — Harvard University administrators secretly searched the emails of 16 deans last fall, looking for a leak to reporters about a case of cheating, two newspapers reported.

The email accounts belonged to deans on the Administrative Board, a committee addressing the cheating, The Boston Globe and The New York Times reported, citing school officials. The deans were not warned about the email access and only one was told of the search afterward.

Harvard will not comment on personnel matters or provide additional information about the board cases that were concluded during the fall term, Michael Smith, dean of the Faculty of Arts and Sciences, said in an email Sunday. If the committee's work were compromised, Harvard College would protect the process, he said.

"Generally speaking, however, if circumstances were to arise that gave reason to believe that the Administrative Board process might have been compromised, then Harvard College would take all necessary and appropriate actions under our procedures to safeguard the integrity of that process, which is designed to protect the rights of our students to privacy and due process," he said.

Smith's office and the Harvard general counsel's office authorized the search, the Globe reported.

Harvard spokesman Jeff Neal did not specifically address the allegations but denied any routine monitoring of emails.

"Any assertion that Harvard routinely monitors emails — for any reason — is patently false," he said in an email.

Sharon Howell, Harvard's senior resident dean, criticized Harvard administrators and said they owed the deans an apology for failing to notify the email accountholders until after gaining access to the emails.

"They don't seem to think they've done anything wrong," she told the Globe.

Harvard University said last month that it issued academic sanctions against about 60 students who were forced to withdraw from school for a period of time in a cheating scandal that involved the final exam in a class on Congress. The school implicated as many as 125 students in the scandal when officials first addressed the issue last year.

The inquiry started after a teaching assistant in a spring semester undergraduate-level government class detected problems in the take-home test, including that students may have shared answers.

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Study: Renting a home gets foot in the door for buying

WASHINGTON — Could rental houses owned and managed by deep-pocketed hedge funds and big investors be the post-bust stepping stones to home ownership for huge numbers of renters?

Could they also provide a form of safe harbor or sanctuary for thousands of families who were displaced by financial difficulties from their previous homes through foreclosures or short sales?

A new national study suggests that the answer to both questions is yes.

Over the past five years, according to Wall Street analysts' estimates, between $7 billion and $9 billion worth of distressed single-family homes have been purchased and converted to rentals by institutional investors — hedge funds, private partnerships of high net-worth individuals and even pools of capital raised among investors in foreign countries.

Unlike traditional "mom and pop" rental home investors, these funds have been scooping up dozens, sometimes hundreds, of properties at a time through all-cash purchases of foreclosures, short sales and bulk packages. Some of the bulk acquisitions have come from the troubled-asset portfolios of financing giants Fannie Mae and Freddie Mac, others from banks that have taken over homes left by strategic defaulters.

Though single-family rental homes have long been a part of the American housing scene, the involvement of large-scale institutional investors is causing the category to explode. According to a new study conducted by pollster ORC International for Premier Property Management Group, a company that works with investors, roughly 52 percent of all rental units in the country are now single-family homes and house 27 percent of all renters.

Recent Census Bureau data cited in the study indicate that the number of single-family rentals grew by 
21 percent between 2005 and 2010 — from the top of the boom through the depths of the bust and foreclosure crisis — compared with a 4 percent increase in total housing units.

What's the significance of this rapid conversion of ownership units to rental? For one thing, according to Mark Fleming, chief economist for CoreLogic, a mortgage and real estate research firm, mass conversions are contributing to the severe declines in homes-for-sale inventories in markets where foreclosure rates were most pronounced during the bust. Lack of inventory, in turn, is pushing up prices of entry-level homes in those areas.

But the ORC-Premier study suggests that the new waves of single-family rentals may also be providing important pathways to home ownership, not only for first-timers but for those displaced by the housing bust. Fully 60 percent of rental home tenants say they plan to buy a house sometime in the next five years. By contrast, only 44 percent of multifamily apartment building renters have similar plans.

According to the study, the high interest in ownership "reflects the new roles single-family rentals are fulfilling as a stepping stone to home ownership ⅛both⅜ for first-time buyers and as a sanctuary for large numbers of families displaced by foreclosure but who plan to buy again when they can afford to do so."

The study found that, compared with apartment tenants, single-family renters made more money ($75,000 to $100,000 versus $50,000 to $75,000), have more children in their homes and are more concerned about local school quality and community facilities such as parks and recreational areas.

Asked by interviewers what impediments to purchasing a house they anticipate within the coming five years, nearly a third said they may not be able to qualify for a mortgage. The time frame coincides with the number of years that individuals with seriously damaged credit files — a foreclosure, bankruptcy, short sale and multiple defaults on other debt obligations — need to fully rehabilitate their credit and build back their credit scores to a level that will qualify them for a home loan on favorable terms.

Bottom line from the study: Single-family rentals are likely to remain a growing factor in the housing market, as incubators and safe havens for future purchasers. At the same time, though, they may, at least temporarily, depress the national home ownership rate, which stands at around 65 percent, down from 
69 percent during the boom.

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Mechanic may have beat on cause of valve clatter

I have a 2000 1.6-liter Honda Civic with 110,000 miles. Recently a valve lifter began to clatter on start-up. It's quiet for 15-30 seconds then clatters for up to a minute before quieting down. After warm-up the engine runs quietly. I had the valves adjusted per the manual but it didn't get better. My mechanic thinks oil gets wiped off the lifter in the first few seconds so the clattering begins. Then as the oil warms and flows to the lifter, it quiets down. Do you have any thoughts or suggestions?

There is some logic to your mechanic's thinking, particularly in light of Honda's recommended oil/filter change interval in "severe service" conditions — every 3,750 miles! Some type of varnish or sludge buildup may be restricting oil flow to the valve train.

But here's my thinking. The lack of oil on the cam lobe/lifter face wouldn't change the clearance between valve and lifter — thus is not likely to be the source of the clatter. Valve clatter is generated by excess clearance between the valve and lifter.

A sticking valve may be causing the temporary clatter. On cold start-up, residual oil on the valve stem is drawn down the valve guide and burned. Wear and carbon buildup on the valve stem and valve guide may be sticking the valve until enough oil flow and heat reaches these parts to allow full valve movement. Adding half a can of SeaFoam Motor Treatment to the oil can help remove varnish and sludge, and I've actually removed valve covers to pour SeaFoam directly down the valve stems on a warm engine to expedite the cleaning process.

***

I have a 1998 Ford Expedition with a 4.6-liter engine and 241,000 miles. This winter I've started having a throttle icing issue. After driving for 15-20 minutes on the freeway, the throttle butterfly freezes and sticks at 1,500 to 2,000 rpm. I pulled the air intake off and found an ice buildup in front of the butterfly on the bottom of the throttle body. I also get a moisture buildup inside the oil filler cap. I pulled the positive crankcase ventilation (PCV) valve after the car had sat overnight — it was iced up.

I replaced the PCV and put some cardboard in the grille to see if I could keep the engine a little warmer. After 150 miles the problem hasn't happened again yet. I think the moisture is coming up the small tube connecting the driver's side of the engine block up to the front of the throttle body because that tube was full of the white gunk. I've found Ford technical service bulletin 01-21-5 that describes a "PCV service kit" for this problem. Can you tell me what the service kit is and if it's worth giving it a shot?

The kit upgrades the PCV valve to a heated PCV valve. The new valve has connections for coolant flow from the original engine coolant temperature sensor to the new valve, then a new hose is installed to carry the coolant from the new PCV valve back to the ECT sensor. By keeping the PCV valve hot, moisture won't condense, freeze and block PCV flow or ice the throttle plate.

From the work you've done, I'm sure you can install this upgraded PCV system yourself. I found the kit available online for less than $50.

***

I have a 2002 Chevy 1500 with the small V8 engine. It no longer gets the 20-plus miles per gallon it used to. The truck has about 125,000 miles on it. Any recommendations to restore the mileage?

Have your shop check the front oxygen sensors' "cross count" rate. These measure how fast the sensors react to changes in the percentage of oxygen in the exhaust. As these sensors age, they slow down. A lower cross count rate prevents the electronic control module from fine-tuning the air-fuel ratio as efficiently, and mileage suffers. At 125,000 miles, it may be time for fresh oxygen sensors.

Paul Brand, author of "How to Repair Your Car," is an automotive troubleshooter, driving instructor and former race-car driver. Readers may write to him at: Star Tribune, 425 Portland Ave. S., Minneapolis, Minn., 55488 or via email at paulbrandstartribune.com. Please explain the problem in detail and include a daytime phone number.

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Congress wants role as Obama pushes trade agenda

WASHINGTON — The Obama administration has embarked on an aggressive trade agenda that could lower barriers and increase U.S. exports to many of the economic giants of Asia and Europe. To make that a reality, though, it may first have to negotiate future trade policy a little closer to home — with Congress.

The administration hopes to complete talks by October on the Trans-Pacific Partnership, which would reduce duties on a wide range of goods and services in the world's most vibrant trading area. Eleven countries, including Australia, Peru, Malaysia, Vietnam, Mexico and Canada, are participating, and Japan has expressed interest in joining.

In his State of the Union address, President Barack Obama announced plans for a second deal, the Transatlantic Trade and Investment Partnership, which would link the United States and the European Union, the world's two largest economies.

Departing U.S. Trade Representative Ron Kirk added to the agenda in January when he notified Congress of plans to start negotiations for a new trade agreement on international trade in services. The talks will include a group of 20 trading partners representing nearly two-thirds of global trade in services.

Obama has set a goal of doubling exports by the end of next year, after drawing criticism from free-trade advocates during his first term for moving too slowly on trade issues.

"The Obama administration suddenly has this highly ambitious trade agenda that they've laid out," said John Murphy, vice president for international affairs at the U.S. Chamber of Commerce. "Now the challenge is going to be executing."

First, Obama must nominate a successor to Kirk, who in January announced plans to step down. Then, he has to work with lawmakers to restore a procedure called trade promotion authority that is regarded as key to getting trade treaties finalized and approved by Congress.

TPA, also known as "fast track," has a history going back to the 1930s and was formalized in a 1974 trade law. Under TPA, Congress and the White House agree on the objectives of trade negotiations, and Congress affirms that it will vote on any trade treaty without offering amendments that would force the administration to go back to the negotiating table.

The last TPA law expired in 2007, and up to now, the Obama White House hasn't pushed for its renewal. Without TPA on the books, trade partners are reluctant to sign off on deals that could later be amended.

That could be fatal to some complex trade deals, such as the future talks with the EU where success hinges on reaching delicate compromises on such issues as European agriculture subsidies and Europe's restrictions on genetically engineered crops.

A strong trade agenda, said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee, requires close cooperation and consultation with Congress, and "trade promotion authority is the linchpin that brings these elements together."

Members of Obama's Democratic Party tend to oppose TPA, arguing that trade pacts negotiated by past administrations have resulted in job losses in America and given short shrift to environmental and labor and human rights issues. The last TPA law was passed in 2002 by the slimmest of margins, with House votes of 215-214 and 215-212.

More than 300 labor and environmental groups, in a letter last week opposing the Trans-Pacific talks, said no TPA legislation should be considered without a thorough assessment of how a trade deal will affect job creation, environmental and labor rights, food sovereignty, access to medicine and other issues.

The administration is coming off a good two years on trade. In 2011, it succeeded in getting Congress to approve three bilateral free trade agreements with South Korea, Colombia and Panama and extend a law that helps workers hurt by foreign competition. Last December, Congress sent the president legislation that removed Cold War restrictions standing in the way of permanent normal trade relations with Russia.

The three free trade bills, negotiated by the George W. Bush administration and reworked after Obama took office, were all covered by the TPA law in effect before 2007.

The administration, in its trade policy agenda report released last week, pledged to work with Congress on TPA "to facilitate the conclusion, approval and implementation of market-opening negotiating efforts."

Rep. Dave Camp, R-Mich., who oversees trade policy as chairman of the House Ways and Means Committee, said he was disappointed the administration has not engaged with Congress on TPA and urged Obama to both nominate a qualified trade representative and immediately begin discussions on renewing the fast track law.

Senate Finance Committee Chairman Max Baucus, D-Mont., joined Hatch in a letter to Kirk that welcomed the US-EU talks and said they "intend to intensify efforts to ensure prompt consideration and renewal of trade promotion authority."

"It is our hope and expectation that the administration will join us in these efforts," they wrote.

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Springfield to seek $1 million for Nov. gas blast

Springfield to seek $1 million for Nov. gas blast

SPRINGFIELD, Mass. — Springfield's chief economic development official says city officials plan to ask Columbia Gas for about $1 million for property damage and other costs tied to the Nov. 23 natural gas blast downtown.

A Columbia Gas employee accidentally punctured a gas line while probing a leak. It leveled a gentlemen's club and damaged many other businesses and residences.

Nearly two dozen emergency personnel, civilians and utility employees were injured. Businesses owners also complained that revenue fell sharply due to the destruction.

The Republican reports  that Kevin E. Kennedy, the city's chief development officer, said the proposed settlement will account for property damage, personal injury, reconstruction and other costs.

A Columbia gas spokeswoman says more than half of 800 claims have been paid, but did not say how much.

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Information from: The Springfield (Mass.) Republican

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Maine lobster fishery certified as sustainable

PORTLAND, Maine — An international organization that certifies fisheries as being sustainably run has given its seal of approval to the Maine lobster fishery.

Maine Gov. Paul LePage announced Sunday that the London-based Marine Stewardship Council has designated the fishery as meeting its standards for responsible fishing practices. The announcement was made at the annual International Boston Seafood Show.

Shucks Maine Lobster President John Hathaway says the designation allows the industry to market itself as sustainably run and differentiate itself from the Canadian lobster fishery. Fisheries that make the cut can use the MSC's ecolabel, a seal that assures consumers that the seafood was not overfished or harvested in a way that harms the ocean.

The Marine Stewardship Council has certified nearly 200 fisheries.

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Studies tie stress from storms, war to heart risks

SAN FRANCISCO — New studies show the toll that stress can take on the heart. Researchers have found higher rates of cardiac problems in veterans with post-traumatic stress disorder, in New Orleans residents six years after Hurricane Katrina and in Greeks struggling through that country's financial turmoil.

Doctors say that disasters and prolonged stress can raise "fight or flight" hormones that affect blood pressure, blood sugar and other things in ways that make heart trouble more likely.

The largest study involved more than 200,000 veterans from California and Nevada. Those with PTSD were more likely to develop heart risk factors such as high blood sugar, cholesterol and blood pressure.

The studies were discussed Sunday at a cardiology conference in San Francisco.

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Nuclear chief: US plants safer after Japan crisis

WASHINGTON — Two years after the nuclear crisis in Japan, the top U.S. regulator says American nuclear power plants are safer than ever, though not trouble-free. A watchdog group calls that assessment overly rosy.

"The performance is quite good," Nuclear Regulatory Commission Chairman Allison Macfarlane said in an interview with The Associated Press.

All but five of the nation's 104 nuclear reactors were performing at acceptable safety levels at the end of 2012, Macfarlane said, citing a recent NRC report. "You can't engage that many reactors and not have a few that are going to have difficulty," she said.

But the watchdog group, the Union of Concerned Scientists, has issued a scathing report saying nearly one in six U.S. nuclear reactors experienced safety breaches last year, due in part to weak oversight. The group accused the NRC of "tolerating the intolerable."

Using the agency's own data, the scientists group said 14 serious incidents, ranging from broken or impaired safety equipment to a cooling water leak, were reported last year. Over the past three years, 40 of the 104 U.S. reactors experienced one or more serious safety-related incidents that required additional action by the NRC, the report said.

"The NRC has repeatedly failed to enforce essential safety regulations," wrote David Lochbaum, director of the group's Nuclear Safety Project and author of the study. "Failing to enforce existing safety regulations is literally a gamble that places lives at stake."

NRC officials disputed the report and said none of the reported incidents harmed workers or the public.

Monday marks the two-year anniversary of the 2011 earthquake and tsunami that crippled Japan's Fukushima Dai-ichi nuclear plant. U.S. regulators, safety advocates and the industry are now debating whether safety changes imposed after the disaster have made the nation's 65 nuclear plants safer.

New rules imposed by the NRC require plant operators to install or improve venting systems to limit core damage in a serious accident and set up sophisticated equipment to monitor water levels in pools of spent nuclear fuel.

The plants also must improve protection of safety equipment installed after the Sept. 11, 2001, terror attacks and make sure they can handle damage to multiple reactors at the same time.

Macfarlane, who took over as NRC chairwoman last July, said U.S. plants are operating safely and are making progress on the new rules, which impose a deadline for completion of 2016 — five years after the Fukushima disaster. "So far, industry seems to be cooperating," she said.

The NRC has been working closely with plant operators "to make sure they understand what we are requiring and that we understand about their situation as well," Macfarlane said.

Even so, the U.S. industry faces a range of difficulties. Problem-plagued plants in Florida and Wisconsin are slated for closure, and four other reactors remain offline because of safety concerns. Shut-down reactors include two at the beleaguered San Onofre nuclear power plant in southern California, which hasn't produced electricity since January 2012, when a tiny radiation leak led to the discovery of damage to hundreds of tubes that carry radioactive water.

Macfarlane said the agency won't let the San Onofre plant reopen until regulators are certain it can operate safely, which may take several months.

Joseph Pollock, vice president of Nuclear Energy Institute, an industry trade association, said plant operators are "working aggressively" to meet the 2016 timeline set by the NRC and have already spent upwards of $40 million on safety efforts. Utilities have bought more than 1,500 pieces of equipment, from emergency diesel generators to sump pumps and satellite phones, Pollock said, and the industry is setting up two regional response centers in Memphis and Phoenix.

The industry expects to meet the 2016 timeline "with the current understood requirements," Pollock said. If the requirements change or new regulations are added, "then obviously we would have to review that," he said.

Even before the new rules are completely in place, the NRC is considering a new regulation related to the Japan disaster: requiring nuclear operators to spend tens of millions of dollars to install filtered vents at two dozen reactors.

NRC staff recommended the filters as a way to prevent radioactive particles from escaping into the atmosphere after a core meltdown. The filters are required in Japan and throughout much of Europe, but U.S. utilities say they are unnecessary and expensive.

The Nuclear Energy Institute said filters may work in some situations, but not all. The group is calling for a "performance-based approach" that allows a case-by-case determination of whether filtering is the best approach to protect public safety and the environment.

"We're not against filtering. It's how you achieve it," said Marvin Fertel, the group's president and CEO.

The filter issue has ignited a debate on Capitol Hill. Lawmakers from both parties have sent out a flurry of dueling letters for and against the proposal. Twenty-eight Republicans in the House and Senate, joined by more than two dozen House Democrats, have sent letters opposing the requirement as hasty and unnecessary.

A dozen Democratic senators and five House members have written letters backing the requirement, which they say will ensure public safety in the event of a Japan-style accident. The five-member commission is expected to vote on the issue in the next few weeks.

"It's not the time to be rash with hasty new rules, especially when the NRC has added 40-plus 'safety enhancements' " to its initial requirements following the Japan disaster, said Sen. David Vitter, R-La., senior Republican on the Senate Environment and Public Works Committee.

Sen. Barbara Boxer, D-Calif., who chairs the committee, said the filters were needed to protect the 31 U.S. nuclear reactors that have similar designs to the ones that melted down in Japan.

The filters "world reduce the amount of radioactive material released into the environment" in a severe nuclear accident, Boxer wrote in a letter signed by 11 fellow Democrats. "These technologies have been demonstrated in nuclear plants around the world."

Boxer, whose committee has held seven oversight hearings since the Japan disaster, has asked the NRC to report to her on the agency's progress implementing the post-Fukushima safety reforms.

"It is vital that U.S. nuclear power plants fully incorporate the lessons learned from this disaster," she said.

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Follow Matthew Daly on Twitter; https://twiitter.com/MatthewDalyWDC

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Time spin-off highlights risks facing magazines

LOS ANGELES — From Sports Illustrated to People to its namesake magazine, Time Inc., was always an innovator. But now when the troubled magazine industry is facing its greatest challenge, the company Henry Luce founded is struggling to find its way in a digital world.

Time Warner Inc.'s decision to shed its Time Inc. magazine unit last week underscores the challenges facing an industry that remains wedded to glossy paper even as the use of tablet computers, e-readers and smartphones explodes.

Although the new devices might seem to present an array of opportunity for Time Inc.'s 95 magazine titles, many publishers have found the digital transition troublesome. Digital editions of magazines represented just 2.4 percent of all U.S. circulation in the last half of 2012, or about 7.9 million copies, according to the Alliance for Audited Media.

Although that number more than doubled from a year earlier, it's hardly gangbusters growth, considering that the number of tablets in the U.S. also more than doubled last year to 64.8 million, according to research firm IHS.

The fact that so few tablet owners are buying magazines on their devices is a concern because both ad and circulation revenue from print editions have fallen more than 20 percent since their peak near the middle of the last decade. And, according to forecasts, there's no recovery in sight.

"We have to get much better at capturing those (digital) readers," said Mary Berner, president of The Association of Magazine Media.

Before publishers can accomplish that, they need to address a number of problems, experts say. First, the range of free content on the Web has given some readers the impression that it's not necessary to pay for the digital versions of magazine stories. Also, there's no industry standard for pricing. Publishers aren't in agreement over whether to include free access to digital copies as part of a print subscription.

There are technical challenges, too. It's been difficult for magazine makers to create compelling digital editions that fit every screen size and resolution.

Berner acknowledges that customer confusion is part of what's preventing the magazine industry from selling more digital copies. She is working with industry players like Time Inc., Hearst Corp., Conde Nast and Meredith Corp. to standardize both the format of magazines and the way they are sold.

"There used to be a couple ways you used to be able to get a magazine: you could subscribe or buy it at the newsstand. Now there's 25 ways. Joe Average consumer just isn't that clear on it yet," she said. "The confusing part is hurting."

Advertisers are making matters worse. The ad industry has been slow to warm to the notion that they still need to pay top dollar to advertise in the tablet editions of magazines, even though much cheaper website ads are just a finger-swipe away.

But many magazines still command significant premiums. A full-page ad in Elle magazine, for instance, costs $155,680 to reach the readers of 1.1 million copies, or about $141 for every 1,000, according to a rate card that the magazine posted online.

Compare that to a 30-second ad during this year's Super Bowl, which —at most— cost $37 per 1,000 TV households, or $4 million to reach 108 million TV sets, according to CBS. A typical website ad costs in the single-digit dollars per 1,000 viewers, although pricing varies by ad size and other features.

Magazine insiders say the price of their ad space is worth it because ads reach a targeted, engaged audience that actually wants to see the commercial come-ons. Even so, advertisers bristle at the idea that tablet editions command the same price premium as print pages.

"The costs per thousand are out of whack," said George Janson, director of print for GroupM, a subsidiary of advertising agency giant WPP, whose clients include Ikea, Mars Inc., Marriott and Xerox. "The advertising challenge is there haven't been a lot of metrics. There's very little accountability. That's starting to change now at the advertisers' insistence."

The magazine industry's slim but growing digital subscriber base could help convince advertisers of the value of magazines. Research firm eMarketer predicts that while print magazine ad revenue will remain flat at about $15.1 billion from 2011 to 2016, digital magazine ad revenue will grow from $2.7 billion to $4.1 billion over the same period.

"Tablets have reinvigorated magazine ad revenues," said eMarketer spokesman Clark Fredricksen.

But even as overall magazine advertising revenue grows, it's not expanding nearly as fast as U.S. ad spending as a whole. The predicted turnaround won't return the industry to pre-recession levels —and it may come too late for Time Warner Inc.

Revenue at its Time Inc. unit slipped to $3.4 billion in 2012, about 38 percent below its peak in 2004. Operating profit declined to $420 million, down by more than half of the $934 million posted eight years earlier.

Analysts say spinning off the magazines into a separate, publicly traded company reduces Time Warner's risk. On Friday, two days after Time Warner announced the spin-off, its shares hit a 52-week high of $57.85.

Tony Wible, an analyst with Janney Capital Markets, said the spin-off frees Time Warner from the uncertainty of the magazine industry's digital transition.

"It has the potential to save money, increase revenue per ad, improve measurement, and increase distribution," he wrote in a research note, "but it also competes with a growing number of free online publications and there may be few ad slots in the new medium."

In other words, it's better for parent Time Warner to separate itself now.

Reed Phillips, the CEO of media company advisory firm DeSilva + Phillips, said that for the parent company, there is too much risk involved if the magazines stay.

"Will you come out on the other end as large and as profitable as the current company? There's a lot of concern," he said. "Because of the volatility, that's why Time Warner wants to spin off Time Inc."

Meanwhile, magazine publishers are carefully parsing consumer behavior data to learn how they might make digital magazines more attractive to readers and advertisers. They want to know which ads attract consumers and how long readers engage with an ad. They trying to learn how people read magazines (So far, it's still front to back). It's still not clear whether such data is valuable to advertisers and worth paying more.

"This is a fairly early stage business," said Liz Schimel, the chief digital officer at Meredith Corp., which was in talks to combine with Time Inc. before talks were called off. "We're still in lots of conversations about models and features and metrics."

Magazines don't have a lot of time to figure the digital transition out. TV and digital ad spending is growing quickly, and there are more ways than ever to track down consumers and get a company's message in front of them.

"It's not just print and TV and radio," said Brenda White, a senior vice president in charge of publishing industry ad spending at Starcom USA, a subsidiary of ad agency giant Publicis Groupe, whose clients include Facebook Inc. and Google Inc. "There are all these different digital channels: mobile, tablets, social. Publishing companies have had to evolve their business models to keep up."

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