Revenue climbed at IAC's media unit — but thanks to Newsweek, losses did too
IAC/InterActiveCorp, the media conglomerate behind web properties like Match.com and About.com, bested Wall Street's expectations Wednesday, as operating profits and revenue jumped during its most recent fiscal quarter.
Earnings per share rose to 71 cents, trumping analyst projections of 65 cents, while adjusted profit jumped 23 percent to $67.4 million. Net income declined nearly 40 percent to $40.7 million, but that was due to one-time tax provision, the company said.
Driven by growth in IAC's online dating services, revenue at the company climbed 38 percent to $714.5 million. Analysts had predicted sales of just over $690 million.
But there were dark blotches on the balance sheet, as well. In particular, the latest earnings report revealed why IAC has decided to end Newsweek's print run at the end of the year.
Also read: Barry Diller on Newsweek's Future: 'We Have No Stars in Our Eyes'
Revenue at IAC's media unit increased a whopping 182 percent to $52.7 million after it took full control of the news weekly from the family of the late billionaire Sidney Harman last summer. With that oversight came more red ink, however. Operating losses in the segment grew from $2.8 million to more than $13.2 million, which the company attributed to Newsweek.
Speaking to investors, Barry Diller, the chief executive at IAC/InterActiveCorp said Wednesday that killing Newsweek's print edition is a "painful process" and he has "no stars in his eyes" about its future as an online publication.
"We're not projecting that it'll have X or Y subscribers," he added.
Under Tina Brown, the former editor of Vanity Fair, Newsweek drew attention for provocative cover stories that, for instance, imagined what Princess Diana would be like if she'd lived to be 50. But the magazine didn't sell enough. By transitioning to an all-digital publication, Newsweek will lay off staff and save millions in printing and productions costs, Brown has said.