Time Inc. (NYSE:TIME) reported financial results for its second quarter ended June 30, 2017. Time Inc. President and CEO Rich Battista said, “I am pleased with our second quarter Adjusted OIBDA of $88 million, which was roughly flat year-over-year. Our revenues continued to be impacted by disruption through the first half of 2017, as we said on our last call. Despite that revenue disruption, we executed in a highly disciplined way, which enabled us to beat Adjusted OIBDA expectations. The third quarter represents an important turning point for the Company as we are seeing strong momentum and sequential improvement of year-over-year trends for total advertising revenues. Today, we are reaffirming our 2017 Adjusted OIBDA outlook.”
Battista continued: “On our last earnings call, we outlined aggressive actions—building on what we had accomplished to date—to reduce costs, expand margins, rationalize our portfolio and extend our brands into new growth revenue streams. 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 optimization 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. We plan to use a portion of these savings to invest in our future 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 realize significant cost savings and reinvest in our future, and we see a path to a minimum range of $500 million to $600 million of Adjusted OIBDA within the next three to four years.”
Revenues decreased $75 million, or 10%, in the second quarter of 2017 from the year-earlier quarter to $694 million reflecting declines in Advertising revenues and Circulation revenues. The stronger U.S. dollar relative to the British pound had an $11 million adverse impact on Revenues for the quarter ended June 30, 2017. Excluding the impact of U.S. dollar/British pound exchange rate changes, Revenues would have decreased 8%.
Advertising Revenues decreased $52 million, or 12%, in the second quarter of 2017 from the year-earlier quarter to $374 million primarily due to a decrease in Print and other advertising revenues, driven by fewer advertising pages sold as a result of the continuing secular trend of advertisers shifting advertising spending from print to other media and lower average price per page of advertising sold. In addition, we believe our Advertising revenues were negatively impacted by the public speculation about the ownership of the Company and the trailing effect of the disruption from the reorganization of our advertising sales force. Although the secular print declines are expected to continue, there is encouraging improvement in Print and other advertising for the third quarter of 2017. Additionally, Digital advertising revenues decreased 2% primarily due to a major customer undergoing an agency review, partially offset by an increase in sales of native and branded content advertising, programmatic sales and video. The stronger U.S. dollar relative to the British pound had a $4 million adverse impact on Advertising revenues for the quarter ended June 30, 2017. Excluding the impact of U.S. dollar/British pound exchange rate changes, Advertising revenues would have decreased 11%.
Circulation Revenues decreased $29 million, or 12%, in the second quarter of 2017 from the year-earlier quarter to $207 million as a result of the continued shift in consumer preferences from print to digital media and fewer issues served to customers, primarily due to a change in frequency in 2017. The stronger U.S. dollar relative to the British pound had a $5 million adverse impact on Circulation revenues for the quarter ended June 30, 2017. Excluding the impact of U.S. dollar/British pound exchange rate changes, Circulation revenues would have decreased 10%.
Other Revenues, which include marketing and support services provided to third parties, book publishing, events and licensing, increased $6 million, or 6%, in the second quarter of 2017 from the year-earlier quarter to $113 million due to an increase in content licensing and book publishing, primarily related to bookazines partially offset by a decline related to events. The stronger U.S. dollar relative to the British pound had a $2 million adverse impact on Other revenues for the quarter ended June 30, 2017. Excluding the impact of U.S. dollar/British pound exchange rate changes, Other revenues would have increased 7%.
Costs of Revenues and Selling, General and Administrative Expenses decreased $73 million, or 11%, in the second quarter of 2017 from the year-earlier quarter to $614 million. The decrease in Costs of revenues and Selling, general and administrative expenses was driven by the benefits realized from previously announced cost savings initiatives and lower printing, production and distribution costs driven by lower paper volume and prices. Additionally, included in Selling, general and administrative expenses were $8 million and $7 million of Other costs related to mergers, acquisitions, investments and dispositions, and integration and transformation costs for the quarters ended June 30, 2017 and 2016, respectively. These costs have been excluded from our Adjusted OIBDA calculation. The stronger U.S. dollar relative to the British pound had a $9 million favorable impact on Costs of revenues and Selling, general and administrative expenses for the quarter ended June 30, 2017. Excluding the impact of U.S. dollar/British pound exchange rate changes, Costs of revenues and Selling, general and administrative expenses would have decreased 9%.
Restructuring and Severance Costs increased $21 million in the second quarter of 2017 from the year-earlier quarter to $31 million due to cost re-engineering initiatives undertaken during the quarter ended June 30, 2017, primarily related to headcount reductions.
more detail at: https://invest.timeinc.com/invest/financials/financial-press-releases/press-release-details/2017/Time-Inc-Announces-Strategic-Transformation-Program-and-Reports-Second-Quarter-2017-Results/default.aspx