Time Halts Sales to Second-Largest Wholesale Distributor

   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 [e-mail]

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