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    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.

    Ryan 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.

    Imageaspx 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.

    Freshmen_feb02 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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    Comments

    1. Scott on Apr 10, 2008 8:04:49 PM:

      I'm crossing my fingers that they won't have straight people on almost no covers. Ideally I won't want any on the cover but I know that won't happen. They should focus on gay content and build an audience instead of being a platform for straight people to sell their products.

    1. Mills on Apr 11, 2008 8:49:05 PM:

      Why is this a "dombshell"? The company has been in trouble for while. Announced backed in December it was looking for a buyer to bail them out.

      The magazine as published are old news. Since the internet, you cannot toss a picture of a pretty boy on the front cover and sell magazines. You have to offer the reader quality and substance.

    1. Frank on May 3, 2008 8:15:16 PM:

      This company is absolutely clueless in terms of how to grab a gay male audience that is known for being intelligent. They are so dumbing down this audience and their advertising is an absolute embarrassment to the gay community. Are Repulicans running this company so they can say all gay men are into are half naked bodies and sex?!?!????

    1. CJ on May 5, 2008 8:51:50 PM:

      This company is over. Top management ruined this company and agree about those in charge being clueless. While gay business is booming PlantOut's Inc. fall is no surprise and just shows how incredibly clueless they are.

      CEO is failing miserably and let all those top management people stay and let all the good people go. I only hope top management especially the CEO get what they deserve...unlikely in the Enron world of doing business I know. Save yourself at all costs I would say has been their motto for awhile now.

    1. Angela @gmail.com on May 7, 2008 7:40:09 PM:

      Before this company went public so many good people worked there and it had such incredible potential. Should now be on the top ten list of worst run companies in the country. This company got so greedy so fast and hired all the wrong people except for the people caught in the middle, who they never listened to at all.

      The President, who they finally fired and did insider trading went away quietly with a load of money. The CEO now is finishing off the company ever so quickly.

      Work for a compamy where top management listens and learns from all involved with the company and rewards and promotes people for doing their job. This is a concept unknown to those who unfortunately made all the wrong judgement calls and now only have no other recourse but to take this planet apart piece by piece before there is nothing left.

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      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.

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