$43.6B U.S. agency revenue
Second-quarter advertising revenue at Time Inc., the nation's largest magazine publisher, increased 3% compared to the second quarter of 2013, the company said Tuesday in its first quarterly earnings announcement since spinning off from Time Warner in June. Growth was driven partly by a 12% increase in digital sales, though digital still represents only a modest fraction of total ad sales and overall revenue.
Time Inc.'s ad revenue during the second quarter was $461 million, with digital revenue totaling $74 million. Print and "other advertising revenues" were $387 million, a 1% increase.
The company's acquisition last October of American Express Publishing titles including Food & Wine, Travel & Leisure and Departures magazines led to the year-over-year increase in ad sales. If Time Inc. hadn't bought those magazines, its print and other advertising revenues would have fallen 6%.
Overall revenue at Time Inc. was $820 million, a 2% decline from the previous year.
Circulation revenue declined 5% to $258 million during the second quarter. Subscription sales were off 2% to $171 million; newsstand sales fell 13% to $83 million.
The sharp decline in single-copy sales was partly due to Time Inc. switching the wholesaler that delivers its magazines to newsstands, the company said. Revenues would have been up 1% during the quarter without the move.
Other factors affecting Time Inc.'s quarterly performance include the separation of Fortune and Money magazines from CNNMoney.com in June, part of the split from CNN parent Time Warner, executives noted.
The company reported a net loss of $32 million, compared with net income of $75 million last year.
Time Inc. is the publisher of magazines such as People, Time, Sports Illustrated and InStyle and was the foundation for the media behemoth Time Warner, which was formed in a media megamerger in 1989 and at one time owned everything from Time Warner Cable to movie studios and TV networks such as CNN and HBO.
Time Inc.'s fortunes have declined, however, as print advertising and circulation revenue sagged, leading to the spin-off this year.
Other media companies have made similar moves, including News Corp., Tribune Co. and, most recently, Gannett, publisher of USA Today, which said just this morning that it will spin off its print newspapers into a publicly traded business.
Still reliant on print revenue, Time Inc. has sought to spur growth in areas such as digital ad revenue, marketing services and events. Digital ad sales were lifted thanks partly to Time Inc.'s efforts around programmatic ad technologies like automated buying and real-time bidding. The company expanded its private online ad exchange with Google in February.
Some of its magazine brands are seeing digital and other revenue surpassing print, Time Inc. CFO Jeff Bairstow told investors.
To bolster its presence among national advertisers, Time Inc. has created a "prospecting team" to pitch the company to the top 250 ad spenders who don't currently advertise with Time Inc.
"Early results are quite promising," Time Inc. CEO Joe Ripp said.
Looking ahead, Time Inc. expects full-year revenue of $3.3 billion to $3.7 billion.
To prepare for the spinoff, Time Inc. announced a major restructuring earlier this year, resulting in about 500 layoffs. The company incurred about $115 in severance costs during the first quarter, with another $55 million in restructuring and real estate transaction costs in the second quarter. Time Inc. is planning to move from its headquarters in midtown Manhattan to a new building in lower Manhattan. The move is scheduled for the end of 2015.
Time Inc. is not expecting restructuring costs in the second half of 2014, it said.