Time Inc lowers full-year projection as falling circulation hits ad revenue

Time Inc, publisher of Sports Illustrated, Time and People magazines, has lowered its full-year revenue projection, which took a hit from falling circulation and weak print advertising, during the third quarter, a second time during the year.

Shares of Time, which Time Warner Inc spun off in June to focus on its more profitable entertainment business, were down as much as 9 per cent.

Most publishers had cut costs and beefed up their digital services, the moves had, however, failed to offset the effects of a relentless decline in print advertising amid falling circulation.

Also, advertising dollars are shifting to online media with more people getting their news on smart phones and tablets.

According to FBR Capital Markets analyst William Bird, supply of advertising online continues to grow and it was really a function of explosive growth in mobile and social media usage.

Time also forecast a mid-to high-single digit decline in percentage terms in total revenue for the current quarter, coupled with a decline in advertising, subscription and newsstand revenues.

According to commentators, the holiday season particularly was more challenging for print publishers.

"We currently have a low level of visibility into late November and December when print bookings can exhibit high levels of volatility," chief executive Joe Ripp said on a conference call.

Time Inc was spun off from Time Warner earlier this year. The company's net income came in at $48 million, or 41 cents of adjusted diluted earnings per share.

Revenue continued to be relatively flat at $821 million as against $818 million a year ago.

The company, which owns Time, People, Sports Illustrated and InStyle, also lowered its full-year revenue outlook to a range between $3.27 billion and $3.3 billion. It previously forecast revenues between $3.29 billion and $3.37 billion. It also said the high-end of its estimate for full-year operating income before depreciation and amortisation would be $535 million, down from $547 million it estimated previously.

Several transactions in the last year helped the company's earnings and revenues, including buying several magazine titles from American Express and ending its CNNMoney.com partnership.

According to the company, its quarterly advertising revenue, totaling $428 million, was flat as against a year ago. However, it would have declined 5 per cent without the recent transactions.

Print advertising was down 1 per cent while digital advertising increased 5 per cent.

Circulation revenues, including subscription, newsstand and other sources, were down 2 per cent to $279 million, while subscription revenues declined 1 per cent. Newsstand revenues fell 7 per cent.