Peter Kafka

Recent Posts by Peter Kafka

Time Inc. Keeps Shrinking

newstandLater this year, Time Warner is supposed to jettison Time Inc., its iconic publishing arm. Today’s earnings results illustrate why. And they also make it tough to imagine Time Inc.’s appeal to public investors.

The good news: It’s still a really big publishing company, with 23 percent of the U.S. magazine business. And once it is done firing people, it may make money again.

The bad news: It’s a really big publishing company that’s trending the wrong way.

Overall revenue was down 5 percent, to $737 million. Subscription revenue was down 11 percent, and the main reason advertising revenue was up 2 percent was because Time Inc. now has control of and Sports Illustrated’s website, which used to be run by Time Warner’s cable networks. And the additional money Time Inc. makes from those sites is basically wiped out by the absence of licensing fees they used to charge the cable guys for those sites. Magazine ad dollars were down.

Time Inc., or whatever the new company will be called, should still be profitable for a while, though. The company lost $9 million this quarter, but that’s because it spent $53 million firing about 6 percent of its workforce.

If you are an optimist, you can imagine a scenario where the new company is able to leverage the cash flow it would normally produce into acquisitions, new lines of digital businesses, or … something to turn the top line around. Stranger things have happened.

time inc q1

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— Kara Swisher and Walt Mossberg, in their farewell D post