(Reuters) - Time Inc’s tight leash on costs helped it beat analysts’ expectations on profit and stick to its yearly forecast for operating income on Thursday despite further sharp falls in sales of magazines and hard copy advertising.
Shares in the owner of Time, Sports Illustrated and People magazines have almost halved in value since March as it struggled with a decline in revenue from its print publications.
In the third quarter, however, the company’s selling, general and administrative expenses fell 14.4 percent to $279 million, helping it to earn 36 cents per share compared to analysts’ average forecast of 29 cents.
Analysts had also expected the New York-based publisher to abandon its $400 million forecast for adjusted operating income before depreciation and amortization (OIBDA) and its reiteration of the target sent its shares as much as 10 percent higher.
“With this cost discipline and the growth of our other non-magazine sources of revenue, we’re effectively managing through the print decline,” Chief Executive Rich Battista told an earnings call.
The company said it expects a minimum of $500 million to $600 million of annual adjusted OIBDA in the next 3 to 4 years, excluding the impact of any potential asset sales and there were further signs of online ad growth.
Digital advertising revenue from Time’s core owned-and-operated properties, excluding its ad targeting unit Viant Technology, rose 10 percent for the quarter ended Sept. 30, Battista said.
Including Viant, the New York-based publisher’s digital advertising revenue rose 2.3 percent to $132 million.
Amid the downturn in print, Time has said it would look at selling assets including Time Inc UK and a majority stake in Essence magazine. The assets it had earmarked for a potential sale represented about $488 million in revenue for the year ended June 30.
Battista told Reuters separately that the company was looking to complete these sales around the end of this year.
“We are well under way,” he said. “We haven’t given an exact timeline ... but the goal here is to wrap these up by year-end or shortly thereafter.”
To lower its heavy reliance on magazine sales and print advertisements, Time has announced investments in online video, TV programming and events.
While the company did not give specific numbers on revenue from its video and TV business, Battista said those areas were growing meaningfully.
Its magazines revenue, however, fell 14 percent to $433 million in the quarter ended Sept. 30, reflecting the continued shift in consumer preferences away from print and toward online media.
Time’s total revenue slipped 9.5 percent to $679 million, missing analysts’ estimates of $693.5 million, according to Thomson Reuters I/B/E/S. It marked the sixth straight quarter the company had missed expectations for revenue.
“With print under tremendous pressure and digital not yet growing fast enough, the company is a long way from their goal of sustainable top-line growth, notwithstanding an excellent, ongoing job on costs,” said Huber Research Partners analyst Douglas Arthur.
Net income attributable to Time Inc was $13 million or 14 cents per share, compared to a net loss of $112 million or $1.13 per share a year ago.
Reporting by Sonam Rai in Bengaluru; Editing by Sai Sachin Ravikumar