Time Magazine 2012 Annual Report Download - page 56

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TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)
2012 vs. 2011
For the year ended December 31, 2012, Subscription revenues decreased primarily due to lower newsstand
sales, mainly as a result of market conditions in the magazine publishing industry as well as the current economic
environment in the US and internationally.
For the year ended December 31, 2012, Advertising revenues decreased primarily due to lower magazine
advertising revenues mainly as a result of fewer pages sold due to market conditions in the magazine publishing
industry as well as the current economic environment in the US and internationally.
For the year ended December 31, 2012, Other revenues decreased primarily due to the absence of the QSP
Business.
For the year ended December 31, 2012, the transfer of the management of the SI.com and Golf.com websites
to Time Inc. from Turner in the second quarter of 2012 had a positive effect on Advertising revenues of $26
million and a corresponding negative effect on Other revenues.
The Company expects that the soft market conditions associated with the Publishing segment’s magazine
advertising revenues and newsstand sales will continue in the near term.
For the year ended December 31, 2012, Costs of revenues decreased due primarily to lower production costs,
mainly reflecting reduced print volume, partially offset by higher editorial costs associated with investments in
websites and tablet editions of magazines.
For the year ended December 31, 2012, Selling, general and administrative expenses decreased primarily due
to lower costs of $65 million as a result of the sale of the QSP Business as well as lower compensation, including
bonuses.
As previously noted under “Transactions and Other Items Affecting Comparability,” the results for the year
ended December 31, 2012 included a $36 million loss on operating assets in connection with the sale of the QSP
Business and $6 million of noncash impairments. The 2011 results included $17 million of noncash impairments
of which $11 million related to a tradename impairment.
The Publishing segment expects to incur charges of approximately $60 million during the first quarter of
2013 in connection with a significant restructuring, primarily consisting of headcount reductions.
Operating Income decreased for the year ended December 31, 2012 primarily due to lower Revenues and the
$36 million loss on operating assets in connection with the sale of the QSP Business, offset in part by lower
expenses.
2011 vs. 2010
Subscription revenues decreased primarily due to lower domestic newsstand sales of $23 million,
particularly in the celebrity category, and lower international subscription revenues of $16 million primarily due
to the disposal by sale of certain magazines at IPC in the fourth quarter of 2010 (the “IPC Sales”), partially offset
by higher domestic subscription sales of $18 million.
Advertising revenues decreased primarily reflecting lower international advertising revenues of $11 million
due primarily to the IPC Sales and lower website advertising revenues of $9 million due to the negative impact of
the transfer of the management of the SI.com and Golf.com websites from Time Inc. to Turner in the fourth
quarter of 2010. These decreases were partially offset by higher custom publishing revenues of $12 million.
The increase in Other revenues was due to the license fee for SI.com and Golf.com received from Turner
following the transfer of the websites’ management to Turner.
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