Time Inc. grows digital ad revenue 63% in Q4 earnings report, overall revenue down 1%
But financials are complicated as the publisher still ended the year in the red, but cost cutting may lead to the company returning to growth and profitability in 2017
Time Inc. released its fourth quarter earnings today before the markets opened, and the financials could be interpreted any number of ways depending on how closely you look. The easy to see top lines look pretty good. Yes, revenue was down a bit in Q4, but only 1 percent overall. Net income was up substantially, but for the year Time Inc. recorded a loss. Still it was better than 2015… but then again, Time Inc. took a huge impairment charge in 2015, so pulling that out 2016 was actually worse than 2015.
“We are pleased with our progress and achievements during the quarter and our execution against our plan. In 2017, we are well positioned to accelerate our growth across digital and other media,” Time Inc. President and CEO Rich Battista said.
Print advertising, no surprise, was the weak spot, declining 10 percent. But digital ad revenue boomed to $166 million, up 63 percent. As a result, total ad revenue actually grew by 5 percent, a very nice bump.
Time Inc. is obviously heading away from print to digital advertising, reorganizing its sales force into category sales. The category approach will work best for digital sales across brands, less so for the individual print magazines.
Circulation revenue decreased $31 million or 11 percent in Q4. This would be expected to continue if the emphasis continues to move away from print magazines.
Time Inc. is moving to video content, while at the same time rumors continue that the company might be sold. One wonders if the company can continue in this direction, or sell the company off whole, when the more logical solution would be to sell off the print titles it doesn’t want but Meredith or Hearst would covet. That is exactly what the company seemed to hint at during its conference call.
For 2017, the company is looking to see more growth in digital, hoping to one day hit $1 billion in digital. But the forecast is still for slightly lower overall revenue for this next year, while looking for better margins as digital grows and print declines. Q1, in particular, will be a tough quarter as several magazines will produce less issues than in 2016, simply as a matter the calendar (not an actual decline in total issues).
The company said it is investing $10 million in a video studio in Los Angeles, and just yesterday announced that it had entered into a partnership with Jerry Bruckheimer TV to develop ‘Sports Illustrated: True Crime’ series.