With advertising and circulation revenues still under pressure, the nation’s biggest magazine publisher is looking to cut costs in a big way. On Tuesday, Time Inc. unveiled plans for a “strategic transformation” that will yield more than $400 million in savings over the next few years.
The company posted another round of ad declines in its latest quarterly earnings report.
Time Inc. CEO Rich Battista was straightforward about the challenges facing the publisher, confirming: “Our revenues continued to be impacted by disruption through the first half of 2017.”
Total revenues fell 10% from $769 million in the second quarter of 2016 to $694 million in the second quarter of 2017, while operating income fell from $50 million to a loss of $38 million. Ad revenues were down 12% to $374 million, chiefly due to the long-term decline in print ads, while circ fell 12% to $207 million.
On a positive note, revenues from other activities, including marketing services, book publishing, events and licensing, rose 6% to $113 million.
The cost-cutting initiative will seek a total of $400 million in run-rate cost savings in a range of areas, according to Battista. The projected cost savings will be implemented through company-wide initiatives, most scheduled to unfold over the next 18 months.
The strategic transformation also calls for increased focus on high-growth areas, including native and branded content, video, data and targeting, paid products and brand extensions. Together, Battista expects these initiatives to raise Time Inc.’s baseline operating income to a range between $500 million and $600 million within the next three to four years.
The push to cut costs comes amid continuing speculation about Time Inc.’s future, following reports of a possible sale fueled by an unsolicited bid for the publisher by entertainment investor Edgar Bronfman Jr.
In April, the company said it wasn’t on the auction block, while acknowledging talks with a “number of expressions of interest.” Instead, Time Inc. said it will pursue its own strategic plan.
Still, some divestments may be on the table. Last month, Time Inc. revealed plans to sell a majority stake in Essence, its African-American-focused women’s lifestyle publication. It also confirmed that it is exploring the sale of three of its titles, Coastal Living, Sunset and Golf.
It has also reportedly hired an investment bank to explore a possible sale of its UK division.