(Reuters) - Time Inc (TIME.N), the largest magazine publisher in the United States, reported a lower-than-expected quarterly profit and warned sales would decline further this year as it grapples with falling circulation and advertising revenue.
Time’s shares fell as much as 12 percent after the company also forecast declines in both advertising and subscription revenue for the current quarter.
The company, which was spun off from Time Warner Inc (TWX.N) last June, has been severely hit by declining circulation and advertising revenue as consumers shift to reading on smartphones and tablets.
Most publishers, including Time, have been cutting costs, slashing their workforce and beefing up digital services.
The publisher of the Sports Illustrated, Time and People said on a post-earnings conference call it expects revenue for the current quarter to decline in high-single digits on a percentage basis.
Advertising revenue is expected to fall about 10 percent and subscription revenue by mid-single digits on percentage terms in the quarter, the company said.
Some publishers have been more successful in the transition to an online-based business model but most are struggling to make money out of digital content.
New York Times Co (NYT.N) last week posted quarterly revenue that topped estimates as higher digital subscription and advertising sales largely balanced a fall in print ad revenue.
Time said it expects annual revenue to fall 3-6 percent this year.
The forecast implies revenue of $3.08-$3.18 billion for the full year, well below the average analyst estimate of $3.24 billion, according to Thomson Reuters I/B/E/S.
Time’s total advertising revenue fell 8.1 percent to $496 million in the fourth quarter, accounting for about half of the total revenue.
Circulation revenue, which includes subscription and newsstand sales, also fell about 8 percent.
Time said it kick-started a restructuring plan in fourth quarter that resulted in a pre-tax charge of $28 million, aimed at headcount reductions and other efforts.
The company on the call the plan would help it save $110 million in 2015.
The company’s total revenue fell 7.3 percent to $895 million missing analysts’ average estimate of $904.3 million. Net income more than doubled to $145 million, or $1.32 per share.
Excluding items, it earned 73 cents per share, missing analysts’ expectations of 78 cents per share.
The company’s shares were trading down 7 percent at $23.16 Thursday morning on the New York Stock Exchange.
Reporting By Sai Sachin R and Lehar Maan in Bengaluru; Editing by Savio D'Souza and Saumyadeb Chakrabarty