August 13, 2008
Gay media downs. . .
Posted by: Chris
This week has not been a good one for PlanetOut, the struggling giant of gay media. First came notice from the NASDAQ stock exchange that the company had failed for 30 consecutive days to maintain the minimum market value ($5 million) of publicly owned stock and as a result is facing "delisting" -- removal from the exchange, where it trades under the symbol "LGBT." PNO has 90 days to rectify the problem by meeting the $5 million mark for 10 consecutive days.
Planet Out's management responded by saying it would monitor the situation and if the picture doesn't look any rosier, the company will ask to be moved to NASDAQ's Capital Market for smaller publicly traded companies.
The downsizing of PlanetOut isn't just in stock value, of course. Just this afternoon, the company announced that it had completed the sale of its magazine, book publishing and soft-porn business, which includes LPI, Inc. (Advocate, Out and their websites, Out Traveler, Alyson Books) and Spec Pubs, Inc. (Men, Freshmen, Unzipped and the now defunct  magazine).
The new owner, Regent Entertainment (here!TV, Gay Wired) gets the marquis titles for a song: paying $6.5 million in exchange for not just LPI and Spec Pubs but also $6.5 million in advertising on Gay.com and Planet Out's other remaining properties. What a bargain -- considering Planet Out paid more than $31 million to acquire the same titles just three years ago!
At this point, all eyes are on Regent to see what changes they'll bring to the Advocate and Out, especially. Both publications have struggled alongside their gay and "mainstream" counterparts (Instinct, Genre, Time, Newsweek, People, Us) to stay relevant in the age of instant internet info gratification. From what I've seen, the quality of both pubs has improved considerably under the current editors, and the sale at least insures the fate of so much of national gay media isn't so intertwined. (Although Regent is itself another conglomerate).
The news isn't all gloomy for PNO. Financials released yesterday showed the company had stemmed the bleeding somewhat in losses, from a rate of around $800,000 per month for the last year or so to "just" $932,000 for the entire quarter ending June 30. With the high overhead print pubs out of the picture, a leaner meaner PlanetOut has a shot at turning the corner, or at least making itself more attractive for an acquisition.
Apparently some investors think so as well. After trading between $2.00 and $2.30 for several weeks, LGBT finished at $2.65 yesterday. It's a tiny fraction of early, heady days of $12 a share -- before a 1-to-10 reverse stock split to save the stock when it was trading below $1 per share. But it's something.
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