Before the bell this morning Time Inc. reported its Q1 earnings. Net operating income rose 7 percent to $1.4 billion on revenue that did not quite match the same quarter a year ago as the company lowered costs.

Publishing revenue fell 4.66 percent to $737 million from $773 million the year before as the division reported a net loss on the quarter of $9 million versus a net income of $39 million last year. Much of the loss was caused by costs driven by previously announced division layoffs.Chairman and Chief Executive Officer Jeff Bewkes put a positive spin on the report highlighting the company’s strong television performance before speaking of its publishing plans. “This quarter we also announced our plans to spin off Time Inc. into an independent publicly-traded company, which we expect to complete by the end of the year. As we said when we announced the spin-off in March, we believe this is the best structure for both Time Inc. and Time Warner, and expect this step will create additional value for our stockholders. Underscoring our commitment to stockholder returns, so far this year we’ve repurchased almost $870 million of our stock and paid out over $270 million in dividends.”

The Alliance for Audited Media (AAM) released its latest report on newspaper circulations and the report showed that circulation performance is now largely driven by a publisher’s digital circulation growth. While the Wall Street Journal, The New York Times and Chicago Sun-Times reported double digit circulation growth thanks to new digital subscribers, other papers continue to struggle to over come losses of print subscribers.

Gannett’s USA Today saw its circulation fall 7.9 percent fall and fall from number two to number three largest paper in the U.S. as it could not keep up with gains by the NYT in digital subscribers. Both the New York Daily News and New York Post recorded large losses in readers, as well, falling 11 percent and 9.9 percent respectively.

The Washington Post also saw circulation losses, as the papers circulation fell 6.5 percent. The Post has the fewest digital subscribers of any of the top 10 papers with only 42,313 total digital circulation as reported by the AAM.

The AAM report reports total circulation comparisons but masks the details, comparing print readership directly betweetn reports. But pulling up last year’s report one can see where the losses are coming from.

One year ago USA Today reported 1.7 million print readers, while this year’s report shows 1.42 million; the WSJ reported a loss of print circulation from 1.566 million to 1.480 million.

Print circulation at the New York Post fell from 408,579 last year in March to 299,950 this year – by far the biggest percentage loss of the top 10 newspapers (nearly 27 percent).