Source: San Francisco Business Times, CitizenCrain
Gay and lesbian media portal PlanetOut Inc. agreed to sell its magazine and book publishing business to Here Networks for $6 million in cash.
PlanetOut publishes Out and Advocate and several other magazines, but wants to return its focus to its web sites gay.com and planetout.com.
San Francisco-based PlanetOut signed a letter of intent with Regent Releasing, an affiliate of New York-based Here, which is a gay and lesbian television network, San Francisco Business Times reports.
Blogger Chris Crain, former editor of Washington Blade, notes that the sell-off is the latest chapter in the de-coupling of gay media, just years after a trend toward conglomeration.
PlanetOut Inc., was itself the result of the December 2000 merger with PlanetOut Corp. (planetout.com) and Online Partners (gay.com).
Only months earlier that year, Crain recounts, Liberation Publications., Inc. (LPI), which published the Advocate, Alyson Books and soft-core "adult" titles under the name Specialty Publications, had purchased rival Out magazine. Then, in November 2004, PlanetOut Inc., bought LPI, for $32.1 million (or about $36 million in 2008 dollars).
Just four short years later, with PlanetOut struggling financially, the sales price for LPI is only a fraction of what PlanetOut paid.
The price to be paid through a complex structure by the publishing division's new owner is $6 million, San Francisco Business Times reports.
Crain concludes that the declining value of the division probably reflects the difficult economic market for print publications generally, and nationwide magazines in particular. Crain notes that these have been challenging times for the Advocate, published biweekly, and Out, published monthly, when most local gay publications publish weekly and the Internet is on a 24-hour news cycle.
Despite the general problems faced by print media, PlanetOut's online segment has been contributing less to the company's revenue for each of the last three years, the Business Times reports. In 2005 it accounted for 87 percent, in 2006 54 percent, and in 2007 51 percent. Magazine publishing's portion of total revenue rose in each of those years, from 13 percent in 2005 to 46 percent in 2006 and 49 percent in 2007.
The company hired Allen & Co. in January on a three-year contract to help it with strategy, including a possible sale of the company. It said today it is still working with Allen & Co. on further options.
In February, PlanetOut reported a $51.2 million loss for 2007. The company's accumulated deficit on Dec. 31, 2007 was about $89.5 million.
As part of a private placement in July 2007, through which PlanetOut raised $24 million after fees, the company was obliged to try and sell off what it calls "our adult businesses," but it has so far been unable to sell them. The company needs more money, but said in a March regulatory filing that "raising additional financing will be very difficult, if it could be obtained at all."
Here Networks didn't buy LPI's "adult" Specialty Pubs division, Crain reports, though it's unlikely that was based on content since the pay-TV network shows similar content. Those who know LPI well say that Specialty Pubs was long the profit center for the company, but magazines like Men and Freshmen have suffered from online competition as well. But since the LPI that Planet Out purchases is not the same LPI it sold, it's difficult to say how steep a haircut PlanetOut took on the pricetag, Craine notes.
PlanetOut had 237 employees at the end of 2007.
Full article: PlanetOut agrees to sell magazine business for $6 million | San Francisco Business Times
PlanetOut sells Advocate, Out, Alyson | Citizen Crain