Time Inc posts weaker revenues but shares rise as it targets $400m in cost savings

 
Courtney Goldsmith
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Donald Trump was named Time magazine's Person of the Year in 2016 (Source: Getty)

Time Inc revealed lower than expected revenue for the second quarter as advertising sales dropped, but the publisher's shares rose after it announced it is targeting $400m (£308m) in cost savings.

The magazine publisher's share price initially fell six per cent in US morning trading, but it recovered to close 1.09 per cent higher at $13.95.

Time's revenue fell 9.7 per cent to $694m, missing analyst expectations of $703.5m, according to Thomson Reuters.

Magazine circulation revenue fell 12 per cent to $207m in the quarter to the end of June, while advertising revenue also fell about 12 per cent to $374m.

Time reported a loss of $44m, or 44 cents per share in the second quarter, compared with a profit of $18m, or 79 cents per share, a year earlier.

Time, which publishes Sports Illustrated, People and the eponymous Time magazines, has targeted $400m in spending cuts as it, like other traditional publishers, struggles to boost magazine and ad sales due to the rise in online news and entertainment.

Read more: Time Inc swings into loss from third quarter

President and chief executive Rich Battista said,

We’ve been moving with speed and, most significantly, we are announcing today, a strategic transformation program based on a thorough review of Time Inc’s business.

Through this review, we have greater confidence in our path to accelerate the optimisation of costs and revenue growth drivers. We have already targeted more than $400 million of run-rate cost savings, with the majority of initiatives expected to be implemented over the course of the next 18 months.

Battista said the company will use a portion of those savings to invest in key growth areas including native and branded content, video, data and targeting, paid products and services, and brand extensions.

"With this program, we expect to realise significant cost savings and reinvest in our future, and we see a path to a minimum range of $500m to $600m of adjusted OIBDA [operating income before depreciation and amortisation] within the next three to four years," Battista said.

Read more: Donald Trump has beaten Nigel Farage to be named Time's Person of the Year

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