February 12, 2015 Last Updated 12:28 pm

Time Inc. net income up, print revenue down in Q4, print ad pages decline 9% for the year

Both advertising and circulation revenue fall in Q4 and for full year 2014 for the recently spun off Time Inc. as small gains in digital fail to make up for print losses

The publisher of TIME, PEOPLE and Sports Illustrated, the newly spun off Time Inc., today reported Q4 and full year earnings. While net income soared due to the sale of real estate holdings, revenue fell.

Print advertising revenue totaled $409 million in the final quarter of the year, a 10 percent decline over the same quarter a year ago. Digital advertising made small gains, rising to $87 million in Q4, up from $85 million a year ago, though without the impact of corporate transactions, the company said digital revenue would have grown 34 percent. Better growth in digital in prior quarters led the company to record growth in digital advertising of 6.4 percent for the full year. For the full year, total ad revenue only fell 2 percent.

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Circulation revenue, which are comprised of subscription, newsstand and other circulation revenues, also fell: down 8 percent to $288 million as both subscription and newsstand sales declines. Time Inc. did not break out its digital sales.

Net income rose, however, due to the sale of “certain real estate holdings” as the company reported $145 million in net income in Q4, up from $66 million the year before. But for the full year, net income came in at $87 million, down from $201 million in 2013.

“Over the past year, we’ve been fundamentally re-engineering the business, and re-positioning our company for its return to growth,” Time Inc. Chairman and CEO, Joe Ripp said. “We have made significant progress toward the transformation of the cost structure, and successfully protected our margins and cash flows. We accelerated the growth and monetization of our digital audiences. We also became a stand-alone public company for the first time since January 1990.”

TimeInc-mags“As we look forward, we expect 2015 to be a pivotal year as we launch a portfolio of growth initiatives. One of the unique sources of upside for Time Inc. is the ability to extend our powerful brands into new revenue streams.”

Time Inc. has been constantly in the news this quarter, often getting negative attention for moves such as the elimination of photography staff at Sports Illustrated – a move that probably makes a lot of sense for a national magazine today.

Compared to other major magazine publishers, Time Inc. remains almost completely print oriented. Its digital editions for PEOPLE and Sports Illustrated, still report only around 1 to 2 percent of their readership in digital. PEOPLE, which is highly dependent on newsstand sales, had 1.7 percent of its paid subscribers getting digital editions, and only 0.6 percent were buying single issues digitally.

For Sports Illustrated, which was among the first to demo what it felt a tablet edition might look like, digital subscriptions were at less than 1 percent.

New reports should be released in the coming weeks that will show, or not show, progress with digital editions, something that most publishers feel will be important both to lower production and distribution costs, but as a way to build new digital franchises going forward.

Time Inc. said in is conference call that they plan on experimenting with paywalls on its magazine website in the coming year. The company forecast declines in revenue to be 3-6 percent in 2015. Time Inc debt now stands at $877 million, which is down from the over $1 billion in debt the company started with last year.

Ripp also said in the call, in answer to an inquiry into the rumor that Meredith might be a logical acquirer of Time Inc. that he feels Time Inc. would be the acquiring party being “the consolidator of scale.” He also said that because of tax liabilities, that Time Inc. would not be open to a big sales for at least two years following the spin off (in other words, at least one more year).

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