Time Inc. had a lousy Q1 as print revenue plunged 21% and the company struggled with a sales reorganization. Total advertising revenue declined 8% to $360 million.
The stock declined 14% in the wake of the earnings, putting its share price well below the $18 a share three different buyers offered.
The bright spot is that digital revenues rose 32% year over year to $119 million – though that was due to the impact of ad tech acquisitions like Adelphic and Viant. Excluding the acquisitions, digital rose 12%.
Digital now accounts for 36% of Time Inc.’s total revenue. But the future isn’t completely rosy.
One of Viant’s biggest clients is undergoing an agency review, which has affected spending levels. That uncertainty will extend through to the second quarter.
Time Inc. also predicted volatility as Viant’s managed-service business declines and is replaced by its self-service business.
The goal is for clients to use Viant’s data and the Adelphic self-serve platform in order to execute buys programmatically themselves. But that transition could affect Viant’s core managed-service DSP business.
“We think we are well served to have a good foothold with programmatic and self-service and targeting, but there could be volatility,” said Chief Operating Officer and digital President Jen Wong.
Time Inc. highlighted two other digital areas of growth. Native advertising revenue nearly doubled year over year, and its business pipeline shows that the strong growth is likely to continue.
Video revenue grew strongly as well, according to Time Inc., which did not provide details. To expand in video, Time Inc. may explore joint partnerships, according to CEO Rich Battista.
Time Inc. said Q2 will continue to show strong declines in print, but that June likely would show sequential improvement and signal that revenue was getting back on track.
The company also hired an adviser to help it further reduce costs, and said it would explore sales of non-core assets to help it focus on its biggest opportunities. And in the coming months, Time Inc. will get to see if its sales efforts rebound.
As Digiday covered in detail, Time Inc. has moved to category-based sales, as Google and Facebook do. Sellers used to touting the benefits of brand adjacency in People, Sports Illustrated or Real Simple often struggled to adapt to the different sales approach.