By Tess Stynes
Time Inc. said it will halt sales to its second-largest
wholesale distributor because it hasn't been paying the magazine
publisher.
As a result, Time expects to post about $7 million in bad-debt
expense and won't be able to recognize roughly $19 million of net
sales for the second quarter, it said in a regulatory filing. Sales
to the wholesaler marked about 2% of the company's total revenue
last year.
Time, whose spinoff from Time Warner Inc. (TWX) is expected to
close early next month, amended its agreement with its largest
wholesaler to absorb the vast majority of the former wholesaler's
accounts. Time expects the transition period to hurt revenue by
roughly $4 million and result in about $1 million of incremental
costs. Changes to payment terms in the amended agreement are
expected to cut $12 million from Time's 2014 operating cash
flows.
Time Warner disclosed the impending spinoff in March 2013,
following the end of discussions to sell much of the magazine group
to Meredith Corp. The spinoff comes as many magazines are grappling
with declining print advertising revenue.
Write to Tess Stynes at tess.stynes@wsj.com
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