Time races to cut costs after Q2 digital ad drop
TIME Inc.’s second quarter once again spilled red ink as a largerthan-expected drop in revenue erased a year-ago profit.
Digital ads joined print ad revenue in a disappointing pullback in the period.
However, investors cheered the publisher as it wielded a very sharp cost-cutting ax. Shares on Tuesday rose 1.1 percent, to $13.95.
“It’s a cost-cutting story right now,” said Craig Huber, an analyst with Huber Research. “It’s a race to take down costs faster than the revenue decline.”
CEO Rich Battista said the company has identified “$400 million in run rate savings” that will be implemented through 2018.
Unfortuantely, that is likely to spread a little more gloom inside the company, where 400 jobs were cut in June.
The company said earnings before interest, taxes, depreciation and amortization are expected to total $400 million in 2017 before rising slightly to a range of $400 million to $414 million in 2018.
In three to five years, Ebitda should rise to a range of $500 million to $600 million, Time Inc. said.
“I think a lot of investors don’t want to wait until 2021 — that’s 4 ¹/2 years away,” Huber noted.
In the second quarter, revenue tumbled 9.7 percent, to $694 million — below the $703.5 million analysts expected.
The company lost $44 million in the quarter, compared with a profit of $18 million last year.
Total advertising revenue crashed 12 percent — with print ad revenue down 17 percent and digital ads, in a huge surprise, falling 1.6 percent.
The company blamed the digital drop on a big advertiser that had stopped placing ads through Time’s Viant subsidiary.
As Media Ink had predicted, the company was looking to chop costs — up to $400 million. That’s the result of an extensive cost analysis by McKinsey, the consulting giant that Time still has not officially acknowledged has been guiding the company’s thinking for most of the year.
In the earnings call, the consulting giant was referred to only as the company “adviser.”
“I think the transformation is getting under way in terms of — with our adviser that we’ve hired,” said Chief Financial Officer Sue D’Emic, seemingly ready to slip up and confirm McKinsey.
Sources tell Media Ink that in internal documents, McKinsey is referred to only as K2.
Battista took time to vent that many of the digital initiatives are not properly credited by Wall Street
“We believe that $1 billion of our annual revenue compares favorably in size and scale to that of pure-play digital players and other consumerbased media companies across these areas, but we believe it is not fairly reflected in Time’s valuation,” he complained.
The latest venture is Pet Hero, which hopes to reach the 100 million pet owners and pet lovers in the Time Inc. database.
Rodale romanced
Speculation is swirling around Rodale, now that first-round bids landed at Allen & Co. on Aug. 3.
Axel Johnson, the Sweden-based multinational conglomerate, is still in the hunt, one source said.
Though its holdings in the past include energy, IT, real estate and grocery chains, sources say the conglomerate’s head of North American operations, Clare Peeters, was formerly with Perseus Publishing and Random House.
Peeters did not return a call seeking comment.
The 140-year-old company clearly has money. Antonia Ax:son John
son, the richest woman in Sweden, stepped down as chairman of the company in 2015 and turned it over to her daughter, Caroline Berg.
Hearst and Meredith are believed to be solidly in the hunt for the publisher of Men’s Health and Women’s Health and Prevention.
Rodale’s book division is behind Al Gore’s latest, “An Inconvenient Sequel: Truth to Power.”
Kaplan crosses line
Don Kaplan, the deputy head of content/features at the Daily News for the past five years, has jumped to the press office of Gov. Andy Cuomo. Earlier, Kaplan worked at The Post for 15 years. Sources tell us he’s the newest deputy communications director in Cuomo’s press office, specializing in human services.
On her own
Chris Taylor, who has spent two decades as a public relations specialist for two NYC billionaires — Ronald Perelman and Mike Bloomberg — is planning to hang out her own shingle. She had spent 10 years at Bloomberg LP, but decided not to follow Mayor Mike to City Hall. Instead, Taylor jumped to Perelman’s MacAndrews & Forbes, where she worked for 13 years. “Ronald’s still a client,” she said, while noting two other high-profile clients who she said she can’t reveal until she officially launches sometime after Labor Day. She has yet to zero on an official name, but says her former boss Bloomberg is urging her to call it “Taylor Made P.R.” Media Ink concurs.