NEW YORK (Reuters) - Time Inc, publisher of magazines including People and Sports Illustrated, is turning to the internet to distribute its growing cache of video material and television shows, part of a plan to counter fast-declining print advertising revenue.
The move shows that even the largest traditional publishing companies can no longer ignore the power of video to attract younger viewers, and that Facebook Inc and Netflix Inc are the dominant ways to reach them.
Time is launching a new streaming cooking-competition show called “Homemade vs. The Internet” on Sunday on Facebook’s Watch video service, David Flumenbaum, Time’s executive director of digital video, told Reuters.
Time has also inked deals for its longer TV programming to streaming services Netflix, DirecTV Now and others, as well as traditional broadcasters PBS and the Oprah Winfrey Network, said Ian Orefice, Time’s head of programming.
The company plans to produce about 40 hours of TV programming this year to be licensed to 12 broadcast, cable and digital networks, up from just five hours of programming in 2014.
Shares of Time rose more than 1 percent to $12.90 in midday New York Stock Exchange trading.
Time, which was spun off from Time Warner Inc in June 2014, does not have much choice in trying to diversify revenue. Earlier this month, the company said its revenue tumbled 10 percent, hit by declines in advertising and circulation.
Battered by competition from the web, Time’s shares are trading around half their 2015 peak over $25. The company announced a “transformation program” in August, that included more investment in video, and branded content.
Time says it can produce lower-cost content if it sticks to topics covered by its magazine brands. For instance, Time said its two-night documentary about the life of Princess Diana, which aired on ABC earlier this month, was produced in part by pulling content from People magazine’s archive of photos, magazine spreads and videos.
Conde Nast, one of Time’s biggest competitors in the magazine industry, has a head start. The publishing house founded an entertainment division in 2011 to produce video for Netflix and networks like Investigation Discovery, using content from Conde Nast’s brands such as Vogue and Vanity Fair.
On top of that, behemoths Amazon.com Inc and Apple Inc are investing billions of dollars to create their own original content.
Time has about 75 TV and long-form projects in development, an increase from last year, which include a sports documentary and a feature-length documentary, Orefice said.
The company declined to comment on how much money it thinks it will make from its video content. In its push to put original video content on its platform, Facebook will pay $10,000 to $35,000 for shorter shows between five and 10 minutes, sources told Reuters in May.
Time has already gained some traction with its television content. The second part of its Princess Diana documentary landed in the top 25 most-viewed shows for the week ending Aug. 13, according to Nielsen data. Orefice also said Time’s video viewership has increased each quarter over the last 10 quarters.
Even with growth in viewership, it will take time to be meaningful in Time’s earnings, said Douglas Arthur, an analyst at Huber Research Partners. “I don’t see financial daylight until 2019 or 2020; it’s a long way out.”
Reporting by Sheila Dang; Editing by Anna Driver, Bill Rigby and Andrea Ricci