April 10, 2008
PlanetOut sells Advocate, Out, Alyson
Posted by: Chris
UPDATE: The portion of this post that reports the LPI sale did not include Specialty Pubs turns out not to be correct. For details, check out my subsequent post.
The gay media conglomerate PlanetOut dropped a bombshell yesterday, announcing that it would sell off its magazine and book publishing business, including marquee titles like the Advocate, Out and Alyson Books, to Here Networks for a pricetag of $6 million. The deal should be formalized by the end of the month and the sale completed by Aug. 31, the San Francisco Business Times reported:
PlanetOut … wants to return its focus to its web sites gay.com and planetout.com, which have been contributing a smaller percentage of its revenue recently.
The company's online segment has been contributing less to its revenue for each of the last three years. 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 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, 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 31.1 million (or about $ 36 35 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, likely reflecting the difficult economic market for print publications generally, and nationwide magazines in particular. These have been challenging times for the Advocate, published biweekly, and Out, published monthly, when local gay publications publish weekly and the Internet is on a 24-hour news cycle.
Here Networks didn't buy LPI's "adult" Specialty Pubs division, 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.
That mystery is compounded by the unusual structure of the deal, which involves the payment of the $6 million as pre-paid advertising to be spent by March 2009. Here will also be assuming the liabilities of LPI as well.
The sale of LPI could be seen as an important part of CEO Karen Magee's effort to refocus San Francisco-based PlanetOut on its core online business, including the sale last fall of the RSVP Vacations gay cruise company to competitor Atlantis Events. It's interesting to see Here moving in the opposite direction, expanding from on-demand TV to print media with an online component.
Time will tell which company is making the right bet financially, or whether PlanetOut is simply selling off its old media division on the way to making itself more attractive for a buyout -- something the company announced in January it was seeking. News of the sale improved PlanetOut stock price, up 18 cents (7.9 percent) to $2.45, a split-adjusted price.
For a quick history of PlanetOut and LPI, follow the jump:
• In 1994, company co-founder Mark Elderkin registered the domain name Gay.com.
• At roughly the same time, Tom Rielly, an early pioneer of gay content on the Web, launched PlanetOut Corp.
• By 1999, Gay.com was drawing more than 1 million visitors each month.
• In 1999, Gay.com merged with Gay.net parent company Online Partners.com Inc.
• In February 2000, Liberation Publications Inc. (LPI), which publishes Advocate magazine, purchased its key rival, Out magazine.
• In March 2000, PlanetOut released a letter of intent to merge with Liberation Publications Inc., publisher of national gay magazines the Advocate and Out.
• In December 2000, Online Partners agreed to acquire PlanetOut Corp., creating PlanetOut Partners Inc. The merger closed in April 2001.
• In March 2001, PlanetOut announced that the merger with LPI was canceled, due to several factors including the downturn in the Internet market.
• In April 2004, PlanetOut Partners Inc. became PlanetOut Inc.
• On Oct. 14, 2004, PlanetOut came out as a public company trading on NASDAQ under the ticker symbol LGBT.
• Nov. 9, 2004, PlanetOut announced it has purchased LPI Media Inc. for $
32.1 31.1 million
• May 2007, PlanetOut stock tumbles on news of another financial quarter of poor sales results
• June 2007, Advocate and Out part ways editorially, focusing on different content and readership
• July 2007, With a creditor deadline looming, PlanetOut finds private funding from a group of investors that includes Microsoft billionaire Bill Gates
• July 2007, PlanetOut shares tumble on news of a $25 million accounting hit; the company cut employee rolls by 15 percent and closes offices in London and Buenos Aires
• September 2007, PlanetOut sells RSVP Vacations unit to competitor Atlantis Events
• January 2008, After the seventh consecutive quarter of sales losses, PlanetOut announces that its looking for a buyer and would no longer be publicly releasing quarterly sales and financial data
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