Time
Inc forecasts further declines in advertising revenue
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[February 12, 2015]
By Sai Sachin R and Lehar Maan
(Reuters) - Time Inc, the largest magazine
publisher in the United States, reported a lower-than-expected quarterly
profit and warned sales would decline further this year as it grapples
with falling circulation and advertising revenue.
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Time's shares fell as much as 12 percent after the company also
forecast declines in both advertising and subscription revenue for
the current quarter.
The company, which was spun off from Time Warner Inc <TWX.N> last
June, has been severely hit by declining circulation and advertising
revenue as consumers shift to reading on smartphones and tablets.
Most publishers, including Time, have been cutting costs, slashing
their workforce and beefing up digital services.
The publisher of the Sports Illustrated, Time and People said on a
post-earnings conference call it expects revenue for the current
quarter to decline in high-single digits on a percentage basis.
Advertising revenue is expected to fall about 10 percent and
subscription revenue by mid-single digits on percentage terms in the
quarter, the company said.
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Some publishers have been more successful in the transition to an
online-based business model but most are struggling to make money
out of digital content.
New York Times Co <NYT.N> last week posted quarterly revenue that
topped estimates as higher digital subscription and advertising
sales largely balanced a fall in print ad revenue.
Time said it expects annual revenue to fall 3-6 percent this year.
The forecast implies revenue of $3.08-$3.18 billion for the full
year, well below the average analyst estimate of $3.24 billion,
according to Thomson Reuters I/B/E/S.
Time's total advertising revenue fell 8.1 percent to $496 million in
the fourth quarter, accounting for about half of the total revenue.
Circulation revenue, which includes subscription and newsstand
sales, also fell about 8 percent.
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Time said it kick-started a restructuring plan in fourth quarter
that resulted in a pre-tax charge of $28 million, aimed at headcount
reductions and other efforts.
The company on the call the plan would help it save $110 million in
2015.
The company's total revenue fell 7.3 percent to $895 million missing
analysts' average estimate of $904.3 million. Net income more than
doubled to $145 million, or $1.32 per share.
Excluding items, it earned 73 cents per share, missing analysts'
expectations of 78 cents per share.
The company's shares were trading down 7 percent at $23.16 Thursday
morning on the New York Stock Exchange.
(Reporting By Sai Sachin R and Lehar Maan in Bengaluru; Editing by
Savio D'Souza and Saumyadeb Chakrabarty)
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