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Time profit beats Street; to outsource more jobs
[NEW YORK] Magazine publisher Time Inc reported a quarterly profit that handily beat market estimates as aggressive cost cutting more than made up for weak print ad sales, and said it would move more jobs to its operations in India.
Shares of Time, known for magazines such as People, Sports Illustrated and Time, rose as much as four per cent in morning trading on Tuesday.
Like many traditional publishers, Time Inc has been countering falling ad sales in the print business by slashing costs and tapping new revenue sources.
As part of these efforts, the company plans to outsource "hundreds more" non-editorial jobs this year, and the next, to its offshore operation in Bengaluru, India, chief financial officer Jeff Bairstow told Reuters.
The operations currently employ about 500 people and provides IT, financial and other back-end services.
The company, which has a global workforce of about 7,000, said it would retain the bulk of its editorial operations in the United States and the UK.
Time Inc - which was spun off from Time Warner Inc in June 2014 - said it plans to enter the e-commerce market to grab a bite of the transactions sourced through its websites and magazines. "E-commerce makes sense for us, we're evaluating that market place," Mr Bairstow said on Tuesday.
Time Inc's events business already accounts for a small part of total revenue.
Advertising revenue fell 8.9 per cent to US$420 million in the second quarter ended June 30, while circulation revenue, which includes sales of magazines through subscriptions and newsstand sales, fell 1.6 per cent to US$254 million.
Print ad revenue, which accounts for more than 80 per cent of ad sales, fell 11 per cent, while revenue from the company's digital services rose 4 per cent.
While publishers are aggressively shifting to the Web, most of them have failed to make enough money from digital content.
The company also forecast current-quarter advertising revenue to fall in the low single digits, excluding items.
Editorial and production costs fell 10 per cent in the quarter, helped partly by a strong dollar.
Time Inc reported a profit of 27 US cents per share on an adjusted basis. Total revenue fell 5.7 per cent to US$773 million.
Analysts on average had expected a profit of 15 US cents per share and revenue of US$758 million, according to Thomson Reuters I/B/E/S.
Time Inc's shares were up 2.6 per cent at US$22.43 in midday trading on the New York Stock Exchange.