PlanetOut to sell off magazines
by Matthew S. Bajko
PlanetOut, the national LGBT media company based in San Francisco, announced today (Wednesday, April 9) it had reached a deal to sell its magazine publications to a competing gay media company.
The sale of both Out and the Advocate magazines, as well as the company's book publishing unit Alyson Books, to an affiliate of here Networks had been rumored for months as the struggling PlanetOut has made known for the last year it wanted to focus its attention to revamping its more profitable online properties.
In a release announcing the sale, the two companies did not disclose the sales price. But the San Francisco Business Times reported that the price was given as $6.5 million in a regulatory filing, $6 million in cash and the rest in commitments to buy advertising on PlanetOut sites.
The company also left open the possibility of a sale of its Web properties, noting in a release that it continues to work with consulting firm Allen & Co. "to explore strategic alternatives with respect to its core online businesses."
Here Networks is part of Los Angeles-based Regent Entertainment. The company also owns Gaywired.com, which it has been redesigning with a planned relaunch of the site set for Thursday, April 17.
The two companies expect a definitive agreement to be finalized by April 30 of this year and the transaction is expected to close on or before August 31.
"We are extremely pleased that here Networks will be the new parent company for our publishing business," stated Karen Magee, PlanetOut's chief executive officer, in the release. "Here Networks co-founders Stephen P. Jarchow and Paul Colichman have long been admirers and strong supporters of the Advocate and Out , and we believe that our magazines, their associated websites and Alyson books will thrive under here's ownership."
"We recognize the responsibility and opportunity that LGBTQ media has in making a meaningful and positive impact on society and culture. We will protect and expand these iconic brands with integrity, passion and commitment," stated Jarchow and Colichman.
Magee said the divestiture of the publishing businesses would enable PlanetOut to devote all of its attention and resources to its online sites gay.com and PlanetOut.com. She also said that PlanetOut would promote the theatrical releases of here Network films.
"This will ensure that all of our powerful brands have a better chance to grow and prosper, and will ultimately produce greater value for our shareholders," stated Magee.
Both companies said they would benefit from the sale. And the executives said they would be working closely together over the coming months to provide "the smoothest possible separation and transition of these businesses," stated Magee.
In February, PlanetOut reported a $51.2 million loss for 2007. The company's accumulated deficit on December 31, 2007 was about $89.5 million. The company's dismal financial picture led to the departure of top company executives last year and a cash infusion of $26.2 million from investors to stave off its creditors.