Close on the heels of a sweeping reorganization affecting both the business and editorial sides of the company, Time Inc. is moving to slash costs with around 110 layoffs, most of them concentrated in the publisher’s sales and marketing force, according to multiple press reports.
The laid off staffers equal roughly 1.5% of the company’s total workforce of 7,200 employees, as stated at the end of last year.
The layoffs come as Time Inc. revealed weak second-quarter earnings results, with total revenues basically flat at $769 million, down less than 1% from $773 million, due mostly to a 7.1% drop in circulation revenues.
This decline more than offset modest increases in advertising revenues, up 1.4% to $426 million, and revenues from other sources, up 8% to $107 million. The company’s total net income for the quarter came to $18 million, down 25% from $24 million during the same quarter in 2015.
Taking a closer look at the ad numbers, prints ads were down 12.8%, while digital advertising jumped 65%, due in large part to Time Inc.’s acquisition of ad platform Viant in February.
It’s worth noting that Time Inc. remains heavily indebted, carrying a total of $1.24 billion in debt, down slightly from $1.29 billion during the second quarter of last year. Most of this debt was incurred in connection with the transaction to spin Time Inc. off from its erstwhile corporate parent, Time Warner, back in 2014.
Moreover, the publisher has revised the forecast for its estimated operating income for the full year 2016 down from $430 million to $400 million. That yields a ratio of debt to operating income of around three-to-one, making it a highly leverage company by common investor standards.
For comparison, Meredith Corp., another big publicly traded magazine publisher, has a debt to earnings ratio of 2.3 to 1.