Time Inc. Expands Into Video Streaming

Time Inc.(NYSE: TIME) recently announced that the upcoming launch of the People Entertainment Network, an ad-supported streaming video service which will be available via its site and mobile app. The channel, which will be streamed both live and on-demand, will focus on celebrities, human interest stories, and live events, and will feature five hours of original programs per week.

Why is Time Inc. doing this?

In the years since it was spun off of Time Warner(NYSE: TWX) in 2014, Time Inc. has struggled with declining circulation numbers and print ad revenues for its magazines. In July, it declared that it would reorganize its business to capitalize on broader content distribution, putting less emphasis on printed content and making heavier investments in digital content, videos, live events, and social media.

At the time, the company claimed the move would boost its revenue by 1% to 5% in 2016, marking its first significant top line growth in five years. Analysts currently expect Time to post just 0.4% sales growth this year followed by a 0.6% decline next year.

The company’s turnaround efforts are headed by Rich Battista, an entertainment and media veteran who joined it as executive vie president and president of People and Entertainment Weekly last year. Battista subsequently took over many of Time’s flagship magazines and oversaw the launch of Instant, a mobile-first site that follows social media stars, to complement Time’s purchase of entertainment and lifestyle site HelloGiggles last year.

Will the strategy work?

The market for social, mobile, and video streaming services is a crowded one, filled with print publishers attempting to make the difficult digital transition. But last quarter, Time reported that its mobile unique views rose 29% year over year, video unique views jumped 57%, and its social media footprint expanded by 37%.

Time’s total digital advertising revenues rose 65%, but total ad revenues increased just 1% as circulation revenues fell 7%. As a result, Time’s total revenue still decreased 1% to $4 million for the quarter, and rising expenses caused its adjusted EPS to fall nearly 19% to $0.22. It’s clear the company still has a long way to go before it can be considered a true “digital media” player.

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Leo Sun has no position in any stocks mentioned.

Time Inc. Expands Into Video Streaming