Barry Diller's IAC Eyes Smaller Media Unit Loss in 2013 As Newsweek Goes All-Digital
UPDATED: The full consolidation of results from Newsweek Daily Beast dragged down the division's bottom line in the third quarter, but boosted revenue.
Barry Diller's IAC on Wednesday reported higher adjusted earnings and strong revenue growth for its third quarter with its media business recording mixed results. But the company projected reduced media losses next year thanks to Newsweek ending its print publication.
On an earnings conference call, chairman Diller said that the company now owns about 80 percent of Newsweek Daily Beast, whose financial results it has started fully consolidating. Newsweek will stop publishing a print edition and go all-digital at the end of the year, the company recently announced, with Diller saying that this will "dramatically decrease losses." Said Diller: "The prospects for the enterprise are much improved" thanks to the "tough," but and right decision to end the print edition.
For the third quarter, the company's media unit, which includes multi-media production firm Electus, online video site Vimeo and Newsweek Daily Beast, posted a 182 percent year-over-year revenue gain to $52.7 million. But media unit losses multiplied from $2.7 million to $12.2 million. Both were driven by IAC's full consolidation of the financials of Newsweek Daily Beast.
"Revenue increased due to the contribution of Newsweek Daily Beast, which has been consolidated following our acquisition of a controlling interest in late May 2012, and strong growth from Electus and Vimeo," IAC said. "Higher losses primarily reflect the inclusion of Newsweek Daily Beast in our consolidated results."
IAC projected a full-year 2012 media unit loss of $33 mlllion-$38 million before restructuring charges at Newsweek Daily Beast that could amount to up to $10 million. For 2013, IAC on Wednesday predicted a reduced media unit loss of $25 million-$30 million.
The Internet company's reported third-quarter net income declined 37 percent to $40.7 million, but adjusted profit rose 23 percent to $67.4 million. Operating profit jumped 67 percent to $70 million. Adjusted results exclude one-time items and other special factors. One factor in the latest quarter, for example, was a $27.6 million tax income provision, which reversed a year-ago tax benefit and dragged down net income. Revenue rose 38 percent to $714.5 million.