Digital Growth Finally Begins to Outpace Print Declines at Time Inc.
Total ad revenue is up for the first time since the company was spun off from Time Warner in 2014.
Buoyed by considerable growth in digital advertising, Time Inc. revenue remained essentially flat in 2016 compared to the year prior, according to a Q4 earnings report released today.
Overall company revenue dipped 0.9 percent to $3.08 billion, a decrease the company blames on the relatively weak British pound, which it says offset that figure by as much as $46 million.
Digital advertising is by far the company's healthiest revenue stream, up 62.7 percent year-over-year in Q4 and 54.7 percent for the full-year, to $512 million. Print advertising — which still accounts for the lion's share of Time Inc.'s business — continues to tumble, down 9.4 percent to $1.2 billion.
Added together, growth in digital advertising officially overtook declines on the print side. Overall ad revenues jumped 3.4 percent in 2016 to $1.71 billion, the first such increase since the company's 2014 spin-off from Time Warner.
While the digital gains are encouraging, Time Inc. remains highly dependent on its stable of print magazines, whose financial situation is persistently bleak. On top of declines in ad pages, which the company says is the result of advertisers shifting their ad spend to digital media, newsstand sales were off 15.5 percent compared to 2015, and subscription revenue fell 7.6 percent.
Altogether, print advertising, newsstand sales, and circulation revenue accounted for 69 percent of Time Inc.'s total revenue in 2016.
As the company almost certainly explores a potential sale, it remains entrenched in a two-front war: a widespread and ongoing internal reorganization aimed at streamlining operations and facilitating cross-brand advertising sales, and continued investment in areas where leadership envisions higher upside — like mobile, video, and its growing in-house content studio, The Foundry.
Since taking over as CEO in September, Rich Battista has been bullish on Time Inc.'s digital potential, indicating on a Thursday earnings call that digital ad revenue could top $600 million in 2017, which would take a further increase of at least 17 percent over 2016's record-high. Time Inc. properties received more unique visitors in December 2016 than Wikipedia, LinkedIn, or Twitter, according to comScore, and the company — whose assets total $1.02 billion as of today's release — rejected a $1.8 billion buyout offer from potential investor Edgar Bronfman, Jr. in November.
With Q4 results that seemingly lend credence to the theory that the company's digital growth will soon outpace its print declines, expect rumors of a potential sale to heat up in the weeks ahead.