April 18, 2008
PlanetOut-LPI sale, take two
Posted by: Chris
Time for me to revisit my post last week about the sale of LPI (Advocate, Out, Alyson Books) by PlanetOut to Regent, owner of Here Networks and GayWired. I was under the impression that the sale did not include Specialty Publications, the division of LPI (and hence, PlanetOut) that publishes the racier Men, Freshmen and Unzipped magazines. (Specialty also published , a magazine that included couples in near-XXX action, but no longer.)
That puzzled me because that's historically where more of LPI's profits come from. My pal and gay-journo colleague Rex Wockner pointed me to an SEC filing by PlanetOut that includes the actual "letter of intent" for the sale. That document seems to say that Speciatly Pubs is, in fact, included in the sale.
The inclusion of Specialty Pubs actually makes sense for several reasons. Ever since PlanetOut got a badly needed cash infusion from new investors last year, part of the deal was to find a buyer for the more graphic magazines. In addition, as I noted last week, Specialty has been the LPI profit center for some time.
On the other hand, this new info (at least new for me) means LPI was sold intact for $6 million in the same form that PlanetOut bought it in 2005 for $31.1 million. That's a pretty shocking haircut for PlanetOut considering it was less than three years ago. (Factor the inflation-value of that 2005 price, and the difference is even more dramatic.)
For that $6 million Regent is paying for LPI, PlanetOut is also providing $6 million in advertising with PlanetOut for the films etc. of Here Networks. So for a property PlanetOut paid $31 million in 2005, it got a $6 million ad buy from Regent that it now must fulfill.
None of that means the sale was a bad idea for PlanetOut, given the limited market of potential buyers for LPI and the woes of the print pub business generally. What's more, PlanetOut announced back in January that due to its plunging share price and consecutive quarters of sagging revenue, the company was looking for buyers -- for all or parts of the company.
PlanetOut's ongoing troubles are depressing for those of us with history in the gay media biz. The first gay-focused company to go public (trading as LGBT on the NASDAQ exchange), PlanetOut seemed for awhile there to be succeeding where so many dot.com business had failed.
At least in its present, leaner form, PlanetOut can concentrate on its core online business and hopefully re-emerge in some form that is more financially stable and able to provide more than just another online social network, as its founders intended.
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