Time Inc. will test paywalls on its magazine websites next year and finish a review of its portfolio that could result in the sale of certain titles, Chairman-CEO Joe Ripp said during a call Tuesday to explain the company's third-quarter results.
"We are in the process of looking at everything we have and trying to figure out, is there ways for us to make them more valuable than they are today?" Mr. Ripp said. "And if not, does selling them or enhancing them or investing them or partnering them with other people make them more valuable to our shareholders?"
"While we're not commenting on any one particular asset, we're willing to sell those things that make no sense for the portfolio and invest in those that do," he added.
The review is expected to run through next year, with the goal of developing a strategic outlook on all of its assets, according to Mr. Ripp. "We will have a long-term view on every asset we have in the not too distant future," he added.
Time Inc. will also begin experimenting with paywalls on all of its titles next year with an eye toward identifying what Mr. Ripp called a "magical point" that allows revenue growth without alienating readers.
"That balance is going to be struck brand by brand," Mr. Ripp said.
Slight revenue increase
Time Inc., which was spun off from Time Warner and its more lucrative TV and film assets in June, is attempting to steer its way through choppy waters. Print circulation and advertising is in a state of decline as readers flock to digital media and advertisers follow with their budgets. The company has introduced a number of digital initiatives, such as streaming channels and paywalls, to help boost revenue, but it's also conducted layoffs to keep its costs under control. More layoffs are expected.
During the third quarter -- which is the period from July through September -- Time Inc. posted revenue of $821 million, a slight increase over the previous year's $818 million. It beat analysts' expectations of $817.5 million.
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Advertising revenue was flat, at $428 million. Print ad sales decreased 1% to $363 million, while digital climbed 5% to $65 million.
Circulation revenue declined 2% to $279 million, with subscriptions down 1% and newsstand sales off 7%. Single-copy sales were weighed down by the company's switch to a new wholesaler, it said.
However, if you exclude corporation transactions -- such as the sale of its Mexican subsidiary, GEX -- revenue would have declined 6%, the company said. Print and other ad revenue would be down 9%.
Bright spots in digital, events
Digital advertising revenue would have grown 19%, excluding transactions.
"Our digital advertising revenue is ahead of expectations," said Time Inc. CFO Jeff Bairstow.
Digital video fueled the increase. Time Inc. sold 55 million streams on digital video channels it either owns or operates, compared to 25 million streams during the same period last year. It also sold 71 million streams on partner channels.
In the third quarter, Time Inc.'s "Other" revenues, which includes marketing services, branded book publishing and licensing in addition to events, grew 11% from the previous third quarter, to $114 million.
At several different junctures, Mr. Ripp identified events and experiential revenues as a growth area for his company. Time Inc. operates more than 200 events a year, including the Essence Fest, which attracted more than 500,000 people to New Orleans this past year, and Fortune's Most Powerful Women conference, which has a deep waiting list despite the fact that tickets cost more than $8,500 a piece.
Plans to sell Alabama office
The company revised its revenue outlook downward on the year to $3.27 billion from $3.3 billion, mainly because of shrinking print at revenue. "Our print advertising revenue performance is disappointing," Mr. Ripp told investors.
Shrinking page counts and space accounted for most of these declines. "It's almost all volume," Mr. Bairstow said.
The company continued to bend its costs downward by slashing it selling, general and administrative expenses 4%, excluding corporation transactions.
"I'm surprised that costs are coming down as fast as they are," said Douglas Arthur, managing director at Evercore Partners.
Time Inc. also has a letter of intent to sell its Birmingham, Ala., campus, a plan it intends to execute by year's end, which will reduce its costs by more than two thirds, according to Mr. Bairstow. Several Time Inc. magazines, including Southern Living, are based or have employees in Birmingham.