Time (TIME) Joseph A. Ripp on Q4 2015 Results - Earnings Call Transcript

| About: Time Inc. (TIME)

Time, Inc. (NYSE:TIME)

Q4 2015 Earnings Call

February 11, 2016 8:30 am ET

Executives

Jaison T. Blair - Senior Vice President, Corporate Communications and Investor Relations

Joseph A. Ripp - Chairman & Chief Executive Officer

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Analysts

Douglas Middleton Arthur - Huber Research Partners LLC

Jason Boisvert Bazinet - Citigroup Global Markets, Inc. (Broker)

Craig Anthony Huber - Huber Research Partners LLC

Marci L. Ryvicker - Wells Fargo Securities LLC

Barry L. Lucas - Gabelli & Company

Michael Francis McCaffery - Shenkman Capital Management, Inc.

Davis Hebert - Wells Fargo Securities LLC

Operator

Hello, and welcome to the Time Incorporated Fourth Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

Now, I will turn the call over to Mr. Jaison Blair, Senior Vice President of Investor Relations and Corporate Communications.

Jaison T. Blair - Senior Vice President, Corporate Communications and Investor Relations

Good morning, everyone. Thank you for joining us for Time, Inc.'s 2015 fourth quarter earnings call. Joining me today are Joe Ripp, our Chairman and Chief Executive Officer, and Jeff Bairstow, our EVP and Chief Financial Officer.

Please note, that in addition to our release, we have slides containing supplemental information available on our website. On today's call, we will begin with some opening comments from Joe and Jeff, after which we'll open the call for your questions.

Before we start, I'd like to refer you to page number two of the web presentation and remind you that comments today regarding the company's future business plans, prospects and financial performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements are made based on management's current knowledge and assumptions about future events and involve risks and uncertainties that could cause actual results to differ materially from our expectations. In providing these forward-looking statements, the company disclaims any intent or obligation to update them.

For information on important factors that could affect these expectations, please see our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 26, 2015, and our subsequent filings made with the SEC.

Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles. Reconciliation of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or in the presentation materials on our website.

And with that, I'll turn the call over to Joe.

Joseph A. Ripp - Chairman & Chief Executive Officer

Thank you, Jaison, and good morning and thank you for joining the call today. We reported fourth quarter total revenues of $877 million, adjusted OIBDA of $159 million and adjusted diluted EPS of $0.58. Our results reflect our ongoing investments in our growth initiatives, our newly acquired businesses. Jeff will provide more details on the financial results and outlook during his prepared remarks.

Please turn to slide three of the presentation deck. Before I turn the call over to Jeff, I'd like to share with you my enthusiasm for our business and to layout the areas that are expected to have the most significant impact on our return to growth.

What Time Inc. does better than anyone else in the world is create powerful engagements with consumers and advertisers. So what does that mean? We are the leading content company and the preferred destination for people who crave storytelling that is genuine, compelling and impossible to forget. At Time Inc., we embrace all forms of content from investigative longform to social quick takes. We deliver our content through multiple voices and lenses across every audience segment.

Social media and the consumption of content on mobile platforms are allowing us to reach larger audiences than ever before; 120 million in print and over 150 million across desktop and mobile and 189 million through social media. In fact, we believe that each new wave of technology creates extraordinary new opportunities.

Technology allows us to more effectively target consumers and it provides better opportunities to expand our storytelling capabilities and have more meaningful emotional engagements with current and future audiences.

In this world, trusted brands, quality content and deeply engaged audiences will win. This is why I am feeling so enthusiastic about the future of Time Inc. Trust, deep engagement and emotional experiences are what Time Inc. offers consumers and advertisers.

Our diverse portfolio of brands, which sit across all platforms, allow us to touch audiences with the right content at the right time. We engage audiences with trusted, inspiring and movie storytelling, and we know that when people engage emotionally, marketing messages anchor in long-term memory. That is what we've done for nearly 100 years. It's part of our corporate DNA and it's a foundational principle behind our comeback strategy.

We are now on slide seven of the presentation deck. So, how are we transforming Time Inc. to assure continued deep engagement with consumers and advertisers, giving them what they want, when and where they want it? The North Star of Time Inc. is rebuilding the company for revenue growth. In fact, we currently estimate that we will achieve revenue crossover in 2016.

Today, we are introducing the six pillars of revenue crossover. These pillars are the large areas that we're the most excited about and are expected to have the biggest impact on our return to growth.

The first pillar on slide 10 is configuring our team for leadership in the current media environment. The most important job of a leadership team in a comeback is to get the right people in the right jobs. We are building on a core of excellence and we're adding capabilities to position ourselves for our return to growth. We are becoming a talent magnet, hiring and retaining the best and the brightest in both our core businesses and in new growth areas that we are taking the company. This includes video, native content, social media, events, data, programmatic, performance marketing, the list goes on. They come to us very excited to bring their skills and knowledge to a company with our powerful brands and our ability to create powerful engagements with consumers and advertisers.

Additionally, we are making changes internally to more effectively align ourselves with the current media environment. Two weeks ago, we introduced a new advertising go-to-market strategy that establishes a category sales structure for pharma, auto, tech and telecom advertisers and their agencies. We will create teams of sellers and sales support experts to focus exclusively on those categories. These category centers of excellence will build a deeper understanding of the needs of these customers, as well as the products and services those companies desire from us.

The trend at the agency and advertiser level is to consolidate partnerships. They want fewer but deeper relationships. We want to make it easier for our clients to buy across our portfolio and target audiences, and we want to provide solutions to help them break through the clutter. We are confident that this new structure will deliver even better results for our customers and increase our share in these categories.

The second pillar, on slide 11, is using our authority to build digital properties that maximize the benefits of our scale. Everyone on this call understands that great storytelling works very well on desktop, mobile and social platforms. And you've all seen that something really special has been happening at Time Inc.

Over the past two years, we've increased our monthly domestic unique visitors from 65 million to 119 million. To put these numbers in context, breaking through the ceiling of 100 million U.S. unique visitors means that it's viable for us to layer in new digital businesses and sources of revenue, including native products, video and performance based solutions, like our most recent investment, Viant. We believe our digital advertising revenues could increase significantly by growing native branded content and video. And we expect meaningful improvements in the monetization of our large-scale mobile and social audiences.

Our third pillar, on slide 12, is better targeting and customization with data. To thrive in today's media and advertising markets, media companies need a roadmap to target individuals and customize both content experiences and marketing messages, especially across mobile devices.

In 2015, we experienced very strong growth in programmatic revenues. We began making investments, including hiring a team of data scientists to position us to continue to benefit from these favorable trends in the advertising space. Building on that opportunity, today we announced that we entered into a series of agreements for the acquisition of the assets of Viant Technology Inc. Upon the acquisition of the business, Viant's people-based performance platform will allow us to target individuals and customize marketing messages for advertisers.

The acquisition will enable Time Inc. to combine our premium content subscriber and visitor data and advertising inventory with Viant's first-party data and targeting capabilities to bring substantial value to clients on both platforms. The combination will accelerate Time Inc.'s strategy of activating its user base across our portfolio of premium media brands.

The Viant platform will allow Time Inc. to participate in the growing $34 billion performance advertising segment by targeting ad delivery to the optimal audiences, linking devices back to real people, and converting ad spending to actual sales and, most importantly, closing the ROI loop.

The acquisition is game changing for us. Marketers are selecting media partners that have either data-driven capabilities or premium content. We will be able to deliver both in a single platform and will stand apart from those that offer just one or the other. In other words, we will be able to deliver advertisers' messages targeted to optimal audiences across all types of devices along with the ability to measure ROI. In 2016, we expect Viant to contribute approximately $100 million of digital advertising revenue.

Our fourth pillar, on slide 13, is branded content and native solutions. Increasingly, we are hearing from CMOs that they want to become storytellers. They want to create content for their brands that engages their target audiences and help them break through the clutter. This is a natural extension for us, given that Time Inc. is all about creating powerful engagements with consumers and advertisers.

In fact, one way to think about Time Inc. is that each of our 100-plus brands and platforms is like a creative agency with a specific sensibility and expertise reaching a specific audience segment. Additionally, we believe the rise of ad blocking signals that consumers are becoming far less tolerant of intrusive or irrelevant marketing messages.

Custom content and native solutions can be elegantly inserted with an editorial content and read like the edit content users are seeking. Time Inc. is building up native capabilities across its portfolio and at The Foundry in Brooklyn.

Various sources have estimated that U.S. branded content and native solution advertising was approximately $4 billion in 2015 and is expected to grow to $9 billion by 2018. And we are positioning ourselves to become a meaningful player in this marketplace.

The fifth pillar or slide 14 is video. Video is one of the ways that media companies and marketers will solve impression blindness on mobile devices. And Time Inc. brands translate very well into sight, sound and motion. With TV audiences fragmenting and rapidly declining, we believe the TV ecosystem has broken wide open and we are already participating in this disruption as advertisers shift dollars into digital video and OTT offerings.

In 2015, we had extraordinary success in video with premium CPMs and triple-digit year-over-year revenue growth. Our video streams increased approximately 100% year-over-year. Our original video production increased to approximately 23,000 segments. That's up from roughly only 8,000 in 2014.

Our new studio space in lower Manhattan and are food studios in Birmingham will allow us to more than triple our video production capacity. People and EW currently have over 50 video series, some continuous, some limited run, in various stages of development, and we are exploring the possibility for an ad supported over-the-top network for People and EW.

The sixth on slide 15 is new experiences. One of the unique characteristics of our portfolio is the ability to extend our brands, content and audiences into adjacent revenue opportunities. Time Inc's new experiences revenues, which include Live Media, SI Play, e-commerce and various other products, were approximately $100 million in 2015 on an annualized run rate basis. And they should be several hundred million dollars by 2019.

For example, Time Inc. is currently a big player in live media with over 600 events annually. Our brands clearly have the power to convene. And our advertising clients have told us they want to do more events with our brands. We currently have some of the strongest Live Media franchises in the marketplace, including the Essence Festival, Most Powerful Women, Brainstorm Tech, and The Food and Wine Classic.

With the acquisition of inVNT, we are positioning Time Inc. to expand our existing franchises and to launch exciting new ones, including the People Pro Beauty Tour and Entertainment Weekly's Popfest. We believe events that affect people's lives are the next great frontier for marketers and we expect to be a major player in this space.

We remain committed to re-imagining our brands. For example, in 2015 we launched SI Play, which provides digital tools to serve an audience of more than 30 million youth athletes as well as their parents, coaches and leagues. We think SI Play could become the leading youth sports platform and facilitate the transition from analog to digital. It is estimated that 50% of youth sports player registrations are processed by physical registration forms or checks passed along from player to coach.

We're also expanding products and services offered to our audiences and consumers, including the 2015 launch of the Essence Beauty Box. We see 2016 as a very important year for Time Inc. to transition into a growth business. We are renewing the creativity and the entrepreneurship of the organization and, at the same time, we're launching initiatives and investing to create new revenue streams to leverage our existing strengths and capabilities.

As I mentioned before, we believe trusted brands, quality content and deeply engaged audiences are going to win in the current environment. And the Viant acquisition is a game changer that accelerates our data and targeting strategy.

And now, I'd like to turn the call over to Jeff to discuss the financial details of the fourth quarter and full year as well as our outlook. Jeff?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Thank you, Joe and good morning. As Joe mentioned, the focus for this leadership team has been to rebuild the company for revenue growth, to grow and to grow profitably.

Please turn to see the financial highlights section on slide 17 of the presentation deck. Our fourth quarter revenue trends improved sequentially across advertising, circulation and other revenues. The 2% year-over-year decline of total revenues in Q4 was the slowest rate of decline all year.

And as Joe mentioned, we currently project that we will achieve consolidated revenue crossover in 2016. We are seeing positive results from our 2015 portfolio of growth initiatives and from acquisitions. Revenues are running ahead of expectations in the fourth quarter and we are investing to support continued growth. We estimate that our 2015 slate of investments and acquisitions could contribute an incremental pre-tax profit of between $50 million and $100 million by 2019.

With the sale of the Blue Fin Building in the U.K., we ended 2015 with cash, cash equivalents and short-term investment of $711 million or $6.71 per share. In November, we initiated share and debt repurchases. As of February 5, we have bought back $83 million of stock and $100 million in face value of our senior notes. Additionally, we made contributions to the U.K. pension plan of $75 million associated with the sale of the Blue Fin building.

Please turn to the advertising revenues on slide 18 of the presentation deck. For the fourth quarter of 2015, total advertising revenues declined 2% to $484 million. Print and other advertising revenues declined 7% to $382 million. According to Magna Global estimates, U.S. magazine advertising revenues declined 13.5% in 2015. So Time Inc. continues to outperform the industry and grew its overall domestic print advertising share again in 2015.

And as Joe mentioned, we're constantly refining our operations to make us more competitive in the marketplace. Where we have optimized and integrated our ad sales approach and editorial teams, we have seen proof points of revenue turnaround, with many of our brands already achieving advertising revenue crossover.

Turning to digital advertising revenues, during the fourth quarter, digital advertising revenues increased 17% to $102 million. Note that, that was against extremely strong comps last year when we grew digital advertising revenues 34% year-over-year. And as with print, we outperformed the industry. According to Magna Global estimates, 2015 digital advertising sales for publishers increased 15% and, in contrast, Time Inc's digital advertising revenues rose 22% in 2015, excluding the impact of foreign exchange and the dispositions of CNNMoney and GEX.

As we head into 2016, we expect another strong year of digital advertising growth. As Joe mentioned, talent is a key pillar. In January, Jen Wong joined the company as our first President of Time Inc. Digital. For the first time, all of our U.S. digital properties will be focused under a single proven leader. We see large scale opportunities to continue to expand our offerings of native content, video, social and programmatic, in other words, continued digital revenue growth.

Also, Time Inc. has entered into a number of third-party agreements that will help us monetize our mobile webpage volume at significantly higher rates. These third-party deals will enhance our ad product mix by introducing high-impact mobile advertising solutions.

Additionally, today, we announced that we entered into a series of agreements for the acquisition of the assets of Viant Technology. And as Joe said, we expect Viant to contribute over $100 million of digital advertising revenue in 2016.

Viant's people-based performance platform offers our advertising partners a differentiated data driven marketing technology and allows us to participate in the growing $34 billion performance advertising market.

And now, let's turn to our circulation revenues on slide 19. For the fourth quarter of 2015, subscription revenues declined 3% to $185 million. This decline is largely attributable to lower consumer demand for print subscriptions. Even though the subscriber acquisition environment remains challenging, we continue to have a large base of high-value, loyal subscribers with both high and stable renewal rates.

During the fourth quarter, we began migrating to a new state-of-the-art CRM platform to more effectively leverage our data for targeting subscribers and increase our ability to cross-promote across our brand portfolio and subscriber base.

Newsstand revenues declined 6% to $84 million in the quarter. Excluding the estimated impact of 2014 wholesaler disruption, People Magazine experienced its best average unit sale performance of any quarter this year. People Magazine also achieved its highest annual market share of the celebrity newsstand category in its history.

And now, please turn to slide 20 of the presentation deck for other revenues, which included marketing and support services provided to third parties, events, licensing and branded book publishing. For the fourth quarter of 2015, other revenues rose 4% to $115 million, largely driven by acquisitions, including our new youth sports platform, SI Play, plus the expansion of our events capabilities with inVNT and our craft and cycling events acquisitions in the UK.

Now, let me turn to the operating expense slide, slide 21. For the fourth quarter 2015, operating expenses rose $30 million to $723 million. This includes transaction-related expenses of $5 million in 2015, which are excluded from our adjusted OIBDA calculation. Additionally, it includes $11 million of incremental real estate related expenses, plus approximately 400 basis points related to our growth initiatives and costs from our newly acquired businesses.

As I mentioned earlier, we do expect revenue crossover in 2016. We're very pleased with the revenue performance of our growth initiatives and newly acquired businesses, and we will continue to invest to grow and to grow profitably.

We also remain pleased with our cost savings and efficiency efforts. In 2015, we generated in excess of $110 million of total book savings versus 2014. In the fourth quarter, we incurred a restructuring charge of $169 million, of which $131 million is related to our exit from the Time & Life Building and $38 million related to head count reductions.

We continue to make progress on our global sourcing initiative. Since 2014, we have expanded our Time Inc. India office in Bangalore from just over 200 employees to over 600 employees as of December 31, 2015. And we are currently expecting continued expansion of our capabilities at Time Inc. India.

Now, please turn to slide 22 of the presentation deck, which shows that fourth quarter 2015 adjusted OIBDA was $159 million and Time Inc. reported adjusted diluted earnings of $0.58 per share in the quarter.

Now, let's turn to slide 23. We ended the year with $711 million of cash, cash equivalents and short-term investments. And as we stated when we first spun off from Time Warner, we remain committed to a balanced approach to capital allocation. And I would like to put our year-end cash balance in that perspective.

Since the spin-off in June of 2014, we have: one, returned approximately $250 million to our debt and equity holders, which includes share repurchase, debt repayment and dividends; two, we've made strategic investments and – acquisitions and investments of approximately $150 million; three, we've made capital expenditures of approximately $187 million, including the build out of our new office space in lower Manhattan, in Brooklyn and in Birmingham; and fourth, we settled pension obligations with one-time pension payments of nearly $100 million.

During the quarter, we paid a dividend of $0.19 per share or $21 million. And today, we declared a quarterly dividend of $0.19 per share, payable on March 15 to shareholders of record on February 29, indicating an annual dividend yield of approximately 5.6% based on our stock price at yesterday's close.

As we've communicated previously, we intend to manage to a target leverage ratio of between 2 times and 2.5 times net debt to trailing 12-month adjusted OIBDA. At the close of the quarter, our net leverage ratio was 1.37 times. As of February 5, $217 million remains under our share repurchase authorization and $100 million remains under the authorization for debt repurchase.

Now, please turn to slide 24 for our outlook and pacing. For full year 2016, we expect total reported revenue to increase between 1% and 5% year-over-year. As I mentioned earlier, our 2015 growth initiatives and acquisitions are running ahead of expectations. In 2016, we now expect these initiatives and acquisitions to contribute 250 basis points to 350 basis points of revenue. Plus, as I mentioned before, our acquisition of Viant is expected to contribute over $100 million of incremental digital revenue in 2016. Also, our revenue outlook includes the impact of the closure of All You, as well as the adverse impact of foreign exchange, which totaled approximately 200 basis points.

Our 2016 adjusted OIBDA outlook range is $440 million to $490 million. Our 2016 full year outlook includes approximately $25 million of net P&L investment associated with various new initiatives. Excluding those initiatives or investments, our adjusted OIBDA outlook range would be $465 million to $515 million.

On the cost side, we expect our 2015 restructurings and our other cost savings initiatives to generate total in-year book savings of approximately $100 million in 2016, plus the $50 million of annual real estate savings from the move to our new headquarters in lower Manhattan. So to be clear, this is on top of the $140 million of savings realized in 2014 and the more than $110 million realized in 2015.

For the full year 2016, we estimate capital expenditures of between $85 million and $105 million. The estimated real estate component is approximately $40 million, which is largely driven by the remaining capital expenditure payments in Q1 related to the build-out of our new downtown headquarters. Core and growth components of CapEx are expected to be between $45 million and $65 million.

Lastly, on cash and capital allocation, we have significant cash and capital requirements in the first quarter of 2016, many of which are one-time in nature. And these include an agreement with the Rock Group to buy out the bulk of our Time & Life Building lease commitment for $86 million in the first quarter. Keep in mind that going forward, we will have a minimal net cash rent obligation for the Time & Life Building, and we do not pay cash rent at 225 Liberty until 2018. Approximately $50 million of capital expenditures are targeted in the first quarter, much of which is to fund final payments of the build-out of our downtown headquarters.

Q1 payouts also include the 2015 bonus payments, the dividend of approximately 20 million and to fund the Viant transaction. We expect that Time Inc.'s free cash flow will be approximately $300 million annually beginning in 2017. And at last night's closing stock price, this represents a yield of approximately 21%.

Looking ahead to the first quarter, we estimate that total revenues to be flat to down low-single digits year-over-year. Advertising revenues are also forecasted to be down flat to down low-single digits year-over-year. Subscription revenues are forecasted to be down low-single digits year-over-year, newsstand revenues to be down high-single digits year-over-year, other revenues to be up high-teens year-over-year, and operating expenses to increase low-single digits year-over-year.

Our view is that Time Inc. is executing on the plan that we had laid out at the time of the spin, with us now having clear line of sight to top line stability and growth. We are executing on an active capital return strategy that is now in place, and we now have line of sight to effectively leverage our brands to drive profitable growth in the future.

With that, I'd like to turn the call back to the operator and Joe and I will take your questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. Our first question came from the line of Doug Arthur of Huber Research. Your line is now open.

Douglas Middleton Arthur - Huber Research Partners LLC

Yeah. Thanks. Jeff, two questions. On the $440 million to $490 million guidance for adjusted OIBDA in 2016, what is the timing on the redundant real estate? Do you have some lingering redundancy outside of New York in that number or is that clean? That's the first question.

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

So the first answer is, yes, it's clean, and it's – you can pretty much straight line it or allocate it evenly across the year.

Douglas Middleton Arthur - Huber Research Partners LLC

All right. Then, second question, it seems like in the fourth quarter there was a slight mismatch on timing between the acquisitions you made already and the cost. Other revenues didn't get much of a boost, it seems, from acquisitions, but it seems like your cost, particularly SG&A, did. Is there – can you clarify that at all?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Yeah, I think a little bit. We had – I think you might have asked that – actually a question on a prior call about the build of our investments throughout the year. And as you remember, we were a little light in the front-end of the year. So we did have more cost in Q4 from our overall investment initiatives. So that is what drove up the cost a little bit more in Q4.

Douglas Middleton Arthur - Huber Research Partners LLC

All right. Thank you.

Operator

Thank you. The next question is from the line of Jason Bazinet of Citi. Your line is now open.

Jason Boisvert Bazinet - Citigroup Global Markets, Inc. (Broker)

I just had a quick question on leverage. Given that your target is 2 times and 2.5 times on net debt and you sort of walked through all the uses of cash to pay for the acquisition and all the other items. Does the way it pencil out the that you'll sort of be at your leverage target just because you're going to be using a lot of that cash by the time w get to the end of the year?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Yeah, Jason. I think that's right. We're still starting at such a large balance, it forces down that leverage ratio a little bit artificially. So, as you point out and as I articulated in the use of cash in Q1, that's going to bring the cash balances down and it will normalize that rent leverage ratio. We're very comfortable with that 2 times to 2.5 times range, but it's artificially low in Q1 because of that cash balance.

Jason Boisvert Bazinet - Citigroup Global Markets, Inc. (Broker)

Got it. Okay. Thank you very much.

Operator

Thank you. The next question is from the line of Craig Huber of Huber Research Partners. Your line is now open sir.

Craig Anthony Huber - Huber Research Partners LLC

Yes, Good morning. A few questions; I'll just go one at a time here. Can you be a little more specific please on your revenue outlook for 2016 of up 1% to 5%? If you exclude acquisitions – I think you try to mix in initiatives or something, but if you exclude acquisitions, how much do you think your revenues will be up, the organic number, for this new year? First question.

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Yeah. What we try to do is provide – we talked about Viant being up or adding $100 million of revenue in 2016, so that's approximately 300 basis points. We articulated the flow through from investments and growth initiatives. And quite frankly, they're hard to pull away from the core, because of really leveraging the brands. So, we provided that guidance of 250 basis points to 350 basis points and then those growing into 2016. But it's hard to really pull that piece away from the core, so I think that's why we gave you those components.

Craig Anthony Huber - Huber Research Partners LLC

So, I believe, over the summer, you guys talked about, at that point, annualized revenue from a bunch of small acquisitions of about $65 million. Should we almost ignore that to go with this 250 basis points to 350 basis points you're talking about here and then add in this $100 million of Viant on top of that? Is that what you're suggesting?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Yeah, I think that's the best way to look at it, because one of the things we also try to do is simplify things and I could also point out I'd mentioned in there that we have some headwinds from FX. We also had the divestiture – or the closure of All You, that actually negatively impacts the number. But we're still going be up 1% to 5%. So I think that a clean way to do it is as you suggest and it will eliminate some of the noise.

Joseph A. Ripp - Chairman & Chief Executive Officer

Right. And we've also been working – this is Joe Ripp. We've also been working very hard. We bought inVNT last year, and they've been working very hard with us and all of our brands on creating even more exciting events around the country. We've got lots of really good hope for the People Pro Beauty Tour which is going to be launched very shortly. We're getting very favorable response from our advertisers, as well as we know there will be a very large consumer component to that.

So there's a lot of opportunity we see in the acquisitions we're making. What we're trying to do is be very disciplined about them and not buy those things that just add revenue or profit on the bottom line, but buy those things that we can really take them into a new place and a new level, utilizing our audiences, utilizing our advertising contacts, utilizing our content and creative capabilities. So I think that we've been very careful in the acquisitions we've made. We've not chased the shiny objects. And those objects that we have purchased are going to grow quite nicely under the Time Inc. umbrella.

Craig Anthony Huber - Huber Research Partners LLC

If I could ask, that up 1% to 5% for 2016, that includes Viant as well?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

That's correct.

Craig Anthony Huber - Huber Research Partners LLC

Okay. And just one more quick thing; I'll let you go here. For the first quarter, your ad revenue of flat to down slightly, what is that if you break it apart between print versus digital year-over-year, please?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

We're not going to specifically break those out, but I would say that if you look at our Q4 advertising trends, I think those are reasonable markers. If you extend those – so I think we feel very good about our digital growth and we feel that looking at 2016, the print results are more consistent with what we experienced in Q4.

Craig Anthony Huber - Huber Research Partners LLC

Thank you.

Operator

Thank you. Our next question is from the line of Eric Katz of Wells Fargo. Your line is now open.

Marci L. Ryvicker - Wells Fargo Securities LLC

Thanks. It's Marci Ryvicker for Eric. I have a couple of questions. The first, you came in at the low-end of your OIBDA guidance for Q4 after giving a range on November 5. It sounds to me when you answered another question that that really came from more growth expenses than just core maintenance expenses, so just want to make sure that I understood that correctly.

And then related to that, what are the puts and takes for your OIBDA guidance for 2016? Is it more revenue driven or would it be like Q4 where you could come in at the low-end of the range because of incremental expenses?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Yeah. Let me answer the first one. Absolutely, we do think it's prudent to continue to invest in areas that we think will create top line growth and eventually drive bottom line growth. So as expenses were up in Q4 which is why we feel comfortable about providing the up-guidance in 2016. And as far as the puts and the takes, I think we're very comfortable with the guidance that we have provided, between the $440 million and $490 million.

Joseph A. Ripp - Chairman & Chief Executive Officer

Let me just add too. Jeff and I came back to this company a little over two years ago and this is a company that really hadn't grown in 10 years. It had been starved for capital, it was – its web and digital properties really hadn't grown very much. We're very pleased with the digital growth we've achieved. We're very pleased with what we're seeing in the market place now for acquisitions.

We came at the Time Inc. with a very careful script that we laid out on the road show when we first went public of saying, we first needed to go after our costs, we needed to get the place right-sized in the organization, so we had the resources back and reinvest back in this business. But our primary goal all along was to return the company to revenue growth. That was our primary focus.

What's interesting now in the marketplace, when we first started this journey way back when, there were an awful lot of very expensive things in the marketplace, lots of shiny objects that were dramatically overpriced. What we're starting to see in the marketplace is prices are becoming much more rational, people are starting to have a much better view of what their real value is and there are real opportunities for us to invest in this business and grow these brands.

We've always known that these brands have a tremendous opportunity to grow well beyond what they were in printed pages. And we're very excited about the fact that we can now start seeing revenue growth for the organization return back into Time Inc. after a 10-year lag that is going to be I think pretty exciting for the organization.

We just moved downtown and if you had the opportunity to walk around these new offices and feel the excitement of this place and the changes that we've made, it's really quite incredible. And I think that that ability to really attract talent, ability to find things that are worthwhile to invest in, and most importantly, the ability to leverage the huge brands and quality brands and tremendous audiences that we have is really going to help propel us into the future to continue growing this company.

Marci L. Ryvicker - Wells Fargo Securities LLC

Got it. Thank you for that. I have two quick follow-ups. The first is Viant. You gave the $100 million revenue contribution. Is there an OIBDA contribution you could give us? And then, the second follow-up is, how should we think about the dividend for this year? Should be expect it to increase?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

So, as far as the first one, we're comfortable with the guidance of over $100 million from Viant as far as contributing to digital revenues. And the contribution from Viant won't be specifically disclosed but it is included in our overall bottom line guidance.

Joseph A. Ripp - Chairman & Chief Executive Officer

What I've been – since I've been back, I've been talking a lot about data and dramatically improving the data capabilities of Time Inc. We've reported on prior calls that we've now hired a Chief Data Officer. We have a group of data scientists working with us to improve our data capabilities.

Viant just takes us to a whole different level. Viant gives us the ability to really cross platform and target between mobile devices, televisions and desktops in ways that Time Inc. just hasn't had before. The opportunity for us to really – I get really excited about the opportunity for us to combine our premium content with their deterministic advertising platform, that you really can determine if the ad worked.

Viant has relationships with all of the major set-top manufacturers other than Samsung, and they have the ability to target and understand what's going over those devices. So as you know in the TV – most of the TV ratings are based on a survey of about 6,000 people. If you're looking at webs, those are cookie-based approaches where people are trying to model you and determine, do you really look like and act like an upscale woman in Boston. With Viant technology, we not only know that you actually are an upscale woman in Boston, we know you're 29 years old and, by the way, we have your home address. So the ability to really wrap around and target very directly on mobile devices using our data, their data and outside databases that we acquire and will work with is really quite exciting for us. And it really takes our data capabilities to a whole new level, way in excess of anything that Time Inc. has had before.

Marci L. Ryvicker - Wells Fargo Securities LLC

And the dividend?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

The dividend, look, we think it's a very rich dividend at this point and we don't see any change at this point.

Marci L. Ryvicker - Wells Fargo Securities LLC

Great. Thank you.

Operator

Thank you. Next question is from Barry Lucas of Gabelli. Your line is now open.

Barry L. Lucas - Gabelli & Company

Thank you and good morning. I'd like to come back to the cost side, Jeff, if we could. If I'm hearing you right, and hearing Joe right, with the exception of real estate savings and the incremental investment you're making in growth initiatives, are you saying you're pretty much done on the cost side, that there's not much more to do or, if there is something else to do, where do you think the buckets of opportunity are?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

I'd say that the major bucket is continuing to partner with Time Inc. India. I mentioned that we've tripled the size of the staff there. It really is two things. We continue to have cost savings by continuing to leverage that opportunity there. And then we're really growing the capability there. So I would say that's a significant amount of savings, which is why I was comfortable saying that there is a total of $100 million in savings related to the head count reduction and other initiatives across the company.

We continue to bang away at procurement and other cost buckets and efficiency as we put in more technology. But I would say, Bangalore combined with the downtown move and the savings of the $50 million in real estate are the two keys as we move forward.

Barry L. Lucas - Gabelli & Company

Thanks. And maybe more broadly for Joe, what are you hearing from your advertising clients in this environment, which certainly is sloppy for financial markets, but, in terms of conversations that you've had with those clients, what are they telling you? How do they feel about 2016?

Joseph A. Ripp - Chairman & Chief Executive Officer

What they're looking at is they're all trying to figure out how to break through the clutter. Advertising has become a very cluttered marketplace. As I've said before, we're bombarded with more messages today than ever before in the history of man and advertisers are having trouble breaking through that.

What they are getting exciting about – many of them are turning, as you know, towards content. They're trying to create content. They're trying to create direct relationships with their customers. Most advertisers actually don't know who buys their products, because it's bought through remote (43:52) – through stores or other merchants that they really don't have a direct connection to their consumers.

So there's a lot of them talking about, how do we break through this clutter? How do I get data that proves that what I'm doing really works? We just recently announced the category structure where we have three categories going to marketplace. The point of that is, in the past, Time Inc., we'd go to an advertiser and say, we'd like to sell you some pages. We're Time Inc. and we've got some really great products. And by the time we got there, the page allocation was already made. So they made their allocations, digital to TV to other things, and the pages were made.

By changing our category approach, we're really working with our advertisers and saying, how can we help you be more effective, how can we help you sell more things, because we've got this massive advertising distribution platform. And by the way, we are a lot better at content than you are. We don't make bleach and you don't make content, and the reality is, we have 1,000 people that are really good at it and have been doing it for years.

And what we're finding is that there's a real interest in working with us to create those breakthrough programs that really get through the clutter and get the mass – messages that are absorbed in ways that people are starting to understand. In the web and the net, there's advertising blocking going on. It's risen to some pretty high percentages in France and Germany and places like that. It's because people are getting upset with advertising. It's too much noise out there on websites and the like.

We do believe that not only are our delivery vehicles good because they have really highly engaged audiences, but, more importantly, we talked about our launch of programmatic advertising. We believe programmatic advertising and, more importantly, native advertising, most importantly in that regard, is going to be a very large growth area for us; hundreds of millions of dollars of new revenue over the next couple of years, both on our digital side and also in our print side. Because advertisers are trying to figure out how to break through and what we've realized is, we really do have those capabilities.

So we're creating print campaigns in the native formats, we're creating digital campaigns, and we're also creating some exciting video campaigns for our advertisers that are really quite compelling and interesting and they do break through for what people are looking for. So I think it's really – it's pretty interesting time.

Over the last couple of years, I know others – the industry is been talking about revenue guarantees and how to help advertisers know that we work. We've been issuing revenue guarantees to advertiser since 2012. And in fact, since that time, we generated over $430 million of incremental sales for advertisers that are looking for measured media.

We work with Nielsen Catalina Solutions on evaluating that. They evaluate the effectiveness of the campaigns independently. The good news is that our stuff still works and it's still very strong. For every dollar you spend on sales lift, advertisers have seen in magazines a sales lift of about 12%, Nielsen reports paybacks of $17 for every dollar spent. And that compares, if you're looking at $2.54 for portals and networks and $2.44 for TV. So we're very excited about what we have. We're very excited about our ability to talk to advertisers and that's going to take us really forward.

In addition, as I mentioned before, Viant is a very exciting addition to us, because now we can cross-target – one of the problems we had – one of the reasons Facebook is soaking up all the advertising dollars out there is because they have the ability to target on mobile devices and that's been a real pain point for a lot of major advertisers out there, major media companies.

Viant gives me the ability to target on mobile devices as well as televisions because of their relationships with most of the manufacturers. So when I look at the data opportunity for us, combining the quality of the content that we have here with the vast amounts of data that we have with now our targeting capability in mobile and desktop and televisions, it really does transform the opportunity that we see into the future, which is why we get excited about reporting that we found a path back towards growth for this organization.

Barry L. Lucas - Gabelli & Company

Great. Thanks, Joe.

Operator

Thank you. Next question is from the line of Michael McCaffery of Shenkman Capital. Your line is now open.

Michael Francis McCaffery - Shenkman Capital Management, Inc.

Thanks for taking the question. You haven't given the purchase amount for the acquisition, which I'm assuming you're not going to give. But maybe you could give us a sense of where you expect the Q1 cash balance to end up based on some of the other items you have given out on the call?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

You'll obviously see at the end of the quarter in our uses of cash, we will be – it will include acquisitions. The reason I outlined the $86 million paydown in the quarter is there are other variables in there. You're going to have to extrapolate on the rate of share repurchase, debt paydown that sort of thing. So there's certain variables you'll have to take a view on. We'll obviously detail those at the end of the quarter, but right now, we aren't prepared to disclose that purchase price. But you will see it embedded in the cash use or the cash reduction in Q1.

Michael Francis McCaffery - Shenkman Capital Management, Inc.

When do you anticipate that transaction's going to close or has it already closed?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

We're in the process. We had mentioned – Joe and I both have said there's a series of transactions. So you know...

Joseph A. Ripp - Chairman & Chief Executive Officer

We've already executed the first stages of it.

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Right. So...

Joseph A. Ripp - Chairman & Chief Executive Officer

And we'll be closing that shortly.

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Yeah, certainly by the end of the month.

Michael Francis McCaffery - Shenkman Capital Management, Inc.

And at this point, post the Blue Fin transaction, are there any other pension true-ups that need to be done as part of that transaction?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Yeah. We don't see any true-ups. Obviously, I'll caveat that with the interest rate environment, the market returns, but based on the agreement that we made to fund the pension fund, we're very comfortable that we put it in a position of stability and, hopefully, at some point, to have it fully funded.

Michael Francis McCaffery - Shenkman Capital Management, Inc.

And I guess just finally, you've indicated over the last three months or so since this transaction, since the real estate transaction closed that you've been pretty balanced in terms of buying back both bonds and stock. Is your view on both instruments the same at this point in time? Should we think about...

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

No, look, the board authorized $300 million total of stock repurchase; $200 million in debt. We're going to be opportunistic in both markets. And then that will obviously be weighed off the acquisitions that Joe talked about. But we do think it's important to keep our commitments with the rating agencies and the debt community should we want to access those markets in the future, as well as being opportunistic with our cash. Same thing on the shares; we think there's an opportunity to repurchase our shares at what we think to be a very attractive price. And then, again, the third key element is how do we drive the growth through acquisitions and complement the core operations and another initiatives that are in place.

Michael Francis McCaffery - Shenkman Capital Management, Inc.

So just to confirm, you are committed to the $200 million of debt repayment?

Jeffrey John Bairstow - Chief Financial Officer & Executive Vice President

Yeah, we're fully authorized and I think what we've done since we announced it shows our very strong commitment to that – to both programs.

Michael Francis McCaffery - Shenkman Capital Management, Inc.

Great. Thank you.

Joseph A. Ripp - Chairman & Chief Executive Officer

And I'd just like to add, if you look at our price right now, we're trading at a very cheap rate. I think that our Time Inc. stock is really pretty cheap right now.

Operator

Thank you. The next question is from Davis Hebert of Wells Fargo Securities. Your line is now open.

Davis Hebert - Wells Fargo Securities LLC

Hi everyone. Thanks for taking the questions. Just wanted to ask a follow-up on Viant. Is there any sort of historical context you can give us on how that revenue trajectory has looked from a growth perspective?

Joseph A. Ripp - Chairman & Chief Executive Officer

They had two different businesses – actually three businesses there. Viant started off with an advertising cloud business that was – been in place for a long time. It's been around for 16 years. A couple of years ago, they acquired the Myspace assets and they also developed this new technology to allow them to work across mobile platforms, digital platforms and physical addresses to make sure that they can highly target people. That part of the business is growing very nicely.

They've also developed relationship with the major set-top manufacturers about getting access. Your major set-tops have the ability to understand what's being imaged on the screen. And they have developed relationships with the major set-top manufacturers to be able to tap into the data. So their base business, there is one business they have, which is pretty good, but the other business they have is growing very nicely and that's the business we're really attracted to.

The one that allows us to target very directly those consumers that are advertising across multiple platforms and prove ROI back to the advertisers. That's the real key; giving us that ability to work with our advertisers on improving ROI. We've done that for years, as I mentioned before. We've done that with outside data solutions. We've done that – but this is different. This takes this whole thing to a new level where we can actually specifically target that you saw this ad and that you bought that product and we know what the impact will be. So we're really very, very pleased with it.

Davis Hebert - Wells Fargo Securities LLC

Okay, that's helpful. And then, I appreciate the color on the digital and the incremental revenue from Viant on the top line guidance. Maybe you could talk about how comfortable you feel on the visibility of print ad revenue this year and circulation?

Joseph A. Ripp - Chairman & Chief Executive Officer

Print ad revenue is so far so good. As we look forward in the year, visibility on print ad revenues has been declining over the past several years. When I was back here 20 years ago, we knew what we're going to be booking in November now. So it was a much better business, but those days have changed and print buyers have just changed the way they buy. They buy much later in the marketplace. They book those things much later.

But, remember, we have a sales force – a fine sales and marketing sales force of over 800 people that are talking to our clients all the time. So we understand what their allocating to print. We understand the programs we're working on with them. We understand what the opportunities are. So, we have a pretty good sense for what the marketplace is looking for and how they're reacting to print and we also have a really good sense how they're reacting to our new moves and the new programs we're developing for them.

So we have – we're engaged in lots of in-depth conversations with advertisers about creative programs, about data-related programs, about native programs. So it's really the feedback from that group of people, the 800 that are out there doing that that is really giving us the sense of the feel to be able project what we have. Could that change? Of course, if the economy changes drastically, either positively or negatively, that can always be a surprise, because quite frankly, it will be a surprise to the people we're talking to.

So the reality is I think we've got pretty good sense of what's going on, but it is – the general economy out there is uncertain. Right now, we feel pretty good about the forecast we've given you.

Davis Hebert - Wells Fargo Securities LLC

Okay. All right. Thanks very much.

Operator

Jaison T. Blair - Senior Vice President, Corporate Communications and Investor Relations

Okay, terrific, Eunice. Well, with that, we would like to thank you for taking part in our fourth quarter call and we're certainly available if you have any questions or would like to follow-up. Thank you.

Operator

Thank you. And that concludes today's conference call. Thank you for participating. You may now disconnect.

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