Shares of Time Inc. slid 1.8 percent to $24.49 on Thursday, after the publisher gave a less than stellar outlook when it reported fourth-quarter earnings.
Chairman and chief executive Joe Ripp officer spoke of a “return to growth” on the earnings call, as he estimated that revenue would decline between 3 to 6 percent for the year. That would bring sales to between $3.08 billion and $3.18 billion, below Wall Street’s estimate of $3.29 billion.
The dip was due in part to declining circulation and print advertising revenue, a trend that was reflected in Time Inc.’s fourth-quarter results.
For the period ended Dec. 31, net income totaled $145 million, or $1.32 a diluted share, compared with year-ago income of $66 million, or $61 cents a share.
Excluding items, the publisher of Sports Illustrated and InStyle earned 73 cents a share, falling short of analysts’ expectations of 78 cents a share.
The firm’s total revenue slid 7.3 percent to $895 million from $966 million, a year earlier. Wall Street anticipated $904.3 million in sales.
An 8 percent decrease in circulation revenues to $895 million and a 10.1 percent dip in print advertising sales weighed down total revenues. Digital sales edged up 2.4 percent to $87 million—not enough to sustain broader advertising declines.
Ripp cautioned analysts that the company’s “transformation” would take some time, as he laid out how the traditional publisher would become more digitally savvy.
That transformation includes cost saving measures, acquisitions, monetizing non-core assets, increasing its digital advertising business and changing the culture of the company. Part of the changing culture has to do with the convergence of editorial and advertising. Ripp said editors across 11 titles consulted on an ad campaign for Google’s mobile app in the fall. Each editor came up with a handful of questions per issue that would get readers to open the Chrome app on their mobile phones and ask Google.
He offered an example of a Time magazine article about flags, in which the ad would ask, “OK, Google, how many American flags are there on the moon?”
“Our native initiatives are a natural compliment to our creative process and consistent with our commitment editorial standards and integrity,”the ceo said.
Aside from content solutions, other streams of revenue could come from the potential introduction of paid content and a paywall, programmatic advertising and building out a fashion and beauty platform under InStyle.
“Our objectives for our growth initiatives is to plant the seeds and drive our topline towards a crossover in the coming years,” he said, explaining that the actions will “slow the rate of decline” at the company.
“It takes time for the green shoots of investment and growth initiatives to begin to bear fruit. This is why we are going so aggressively after costs, cultural change and the sale of non-core assets,” offered Ripp. “These can have an immediate beneficial impact while we are planting the seeds of the topline turn.”