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by Matthew S. Bajkom.bajko@ebar.com
PlanetOut, the once venerable LGBT media company and the first to be publicly traded, will be de-listed from NASDAQ due to its merger with Here Media.
The San Francisco-based company had traded under the ticker symbol LGBT since its debut in October 2004. It marked the first time a business focused exclusively on the LGBT market was sold and bought on a major stock exchange.
As part of a $4.7 million merger deal it has signed with L.A.-based Here Networks LLC and Regent Entertainment Media, PlanetOut is set to become a subsidiary of the newly named Here Media. The companies announced the deal in early January.
The new company will be majority owned by Regent Entertainment CEO Stephen Jarchow, who will serve as chairman of the combined company, and Here Networks CEO Paul Colichman, who will serve as CEO of the new company. During the first year, both men will receive $1 in salary.
But the two executives will control the company through ownership of 80 percent of its preferred shares. PlanetOut shareholders will receive one common share and one special share in the new company for each share of PlanetOut they own.
"The company is effectively facing de-listing. It doesn't qualify for listing on a stock exchange at the moment because of this reduction in value," said Jarchow during a conference call with investors and reporters Monday, January 26.
The new company, however, will remain a publicly traded and publicly reported company.
"It will be traded over the counter. You will have the ability to buy and sell stock," said Jarchow on the call.
Due to the merger, PlanetOut laid off 33 percent of its staff this month, and the new executives said more layoffs are possible as it reduces duplicative positions.
"I can't say there won't be more staff reductions. There may be other ways to reduce costs. There may also be ways to redeploy people within the company," said Colichman, who also did not rule out purchasing other companies to add to Here Media's ever-expanding empire. "We will make more acquisitions when it makes sense."
The executives said they hope to be "cash profitable" by the end of the year and have Here Media re-listed on the stock exchange as soon as possible. The deal, which still must be finalized by PlanetOut's stockholders and approved by federal regulators, will be a benefit to shareholders, argued Jarchow.
Current PlanetOut CEO Karen Magee agreed, saying on the call that, "Given the evolving media landscape, the proposed merger is absolutely the right move. It is a win for our stockholders and a win for the LGBT community."
Should the company be sold or liquidated during the next four years, the first $4 per share will go to each of the PlanetOut shareholders' share of stock, said Jarchow.
"It leaves you with a much stronger company," he said. "It is designed not only to protect you but give you a confidence level that we mean business on this. We plan to work diligently and hard to make this a success."
Here Networks is primarily made up of the cable subscription service Here TV, which offers original LGBT movies and series on a pay-per-view basis, while Regent is its publishing arm. Regent had already scooped up PlanetOut's publishing business – it once held title to national LGBT publications the Advocate, Out , and HIVPlus – on the cheap last year for $6 million.
Prior to the sale of its magazines, PlanetOut offloaded its cruise ship business, RSVP Vacations, in late December 2007 to competitor Atlantis Events Inc. for $2.1 million as it teetered on collapse due to its ballooning debt load. By the end of 2008 the company's accumulated debt had reached $100 million.
The downsizing of the company was meant to help it focus on its core online brands Planetout.com and Gay.com. But the rollout last fall of a redesigned Gay.com was marred by technical glitches.
In the eyes of the Here Media execs, the Gay.com site is still under-used. They intend to rework the Web site to create a gay version of Hulu, the Web site that carries advertiser-supported entertainment content viewers can watch for free.
"We have always been producers and content developers, we are not a tech company," said Colichman. "We are a content company that uses many, many technologies."
Through the merger, Colichman said advertisers would be able to better reach LGBT eyeballs through Here Media's vast array of television channels, publications and Web sites. It will also better serve viewers, particularly Web and tech savvy LGBT consumers, who want to watch movies and TV shows on their computers and mobile devices without having to also watch numerous commercials.
"Let's move to where the audience is going and be part of the next wave of success as opposed to crying about how things are changing," he said. "The exciting aspect and main reason we want to do this particular venture is it is the next real step in the integration of social networks with content."
Colichman envisions LGBT people chatting online through Gay.com while at the same time watching Here Media's shows and movies, that they then can blog about in the chat rooms or e-mail clips to friends.
"The stage is set to allow this powerful and adverse tool to do its job. To do it, you need professional content produced by our own community to give it full value and life," he said. "We are literally tapping into today's Zeitgeist with what is happening with today's media."
01/29/2009 http://www.ebar.com/news/article.php?sec=news&article=3675Other related stories:
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by Matthew S. Bajkom.bajko@ebar.com
As their printed products shrink, gay publications are retooling how they use their Web sites to better serve readers as well as advertisers.
Most gay news outlets have been on the Web for years and expect readership online will continue to grow. But they are changing how they use their Web sites to deliver the news and make more money.
Instead of merely posting downloadable editions, monthly magazine's like San Jose's OutNow and Sacramento's twice monthly newspaper Outword are now uploading articles to their Web sites that can then be linked to by bloggers, news aggregator sites, and online search tools.
"The question is how to do that and support that without creating another job and revenue to support that," said Fred Palmer, Outword's publisher.
Not having a web presence can hurt a gay paper's advertising, said LGBT marketing expert Bob Witeck, as many companies want to reach readers both online and in the hard copy. Not only do online ads bring in another source of revenue, but also many advertisers are basing where to spend their money partly on a publication's Web site, he said.
"If you didn't have a sophisticated presence online, it would raise the question if you are competitive in advertisers' minds," said Witeck.
The Bay Area Reporter's Web site ebar.com, now just over three years old, is being redesigned this year. Along with the printed edition's articles, many stories with a national focus are posted solely online, and each Monday brings a new online-only Political Notes column. Breaking news stories are also posted online.
Advertisers can also bundle their ad buys, purchasing space not only in the printed paper but banner ads online.
And despite earlier fears of the Web site decreasing readership of the paper, it has not cannibalized readership of the printed edition. To the contrary, general manager Michael Yamashita said it is growing somewhat as more papers are now being distributed outside the Castro to target readers who no longer live in the gayborhood.
By making use of the city's new mounted news racks, the B.A.R. has made inroads into Union Square, South of Market, and Fisherman's Wharf. Each week, only between 8 percent to 10 percent of the 30,000 printed papers remains on newsstands.
"We now have a dozen locations in Union Square," said Yamashita. "We don't have to decrease the amount of our print run. The papers are being picked up but in more locations outside the Castro."
The B.A.R. is also one of several local gay papers that have teamed up with Bay Windows to create online Web sites called Edge. Now in 16 markets, the Edge Web sites pay local gay news outlets to carry their articles and share in advertising revenue.
"We hope that benefits them. It benefits us," said co-publisher Sue O'Connell. "It is like a national television network with local affiliates."
At her paper, which is now 26 years old, the paper is always looking for new ways to survive economically, said O'Connell.
"We view the Baywindows.com site as a way to make incremental revenue," she said.
With her competitors closing up shop, she and her co-publisher Jeff Coakley, launched a new publication called Out at Night that covers New England gay nightlife and brings in money from bar, club, and restaurant ads. And they are also using e-mail as another way to increase ad buys.
"E-blasts are a great tool. I think they don't bother the person who receives them and are a great value for the advertiser," said O'Connell. "At this point, online is where you want to put your resources."
O'Connell said she can see the day when gay papers in certain markets cease printing and publish solely online.
"We just need to be open-minded about that," she said.
In fact, the Divine Providence newspaper in Providence, Rhode Island, sent an e-mail January 16 saying it was now only publishing online except for special issues such as Pride.
San Francisco resident Cheryl Mazak decided that was the best route to take when she and three friends launched the online lesbian magazine http://www.GoGetYourGirlOn.com last September. Mazak, an out lesbian, serves as the site's creative and artistic director.
A photographer and visual artist, Mazak said she had a wealth of material from shooting various celebrities and leaders within the lesbian community but nowhere to publish it.
"It started off with me needing an outlet for this creatively," said Mazak. "It became over time a really great source for news and entertainment and really sensitive interviews to people."
Having taught herself how to manage the Web site, Mazak is now trying to branch out and bring on other writers from around the world. This month she and her co-founders, who have worked on the site for free, began trying to attract advertising.
"We are just gearing up and finalizing our business plan," said Mazak, noting the company became a legal entity on December 23.
She doesn't see her venture as being in competition with other lesbian magazines, like Curve and Sacramento-based Jane and Jane, but working in tandem.
"I love Curve magazine. I think that this is going to be how people find their news immediately, but I think there is something very soothing and relaxing having that tactile magazine and smell of the paper," said Mazak. "That is something people love. They love to flip through the pages. There is something lost in that experience when you are online. I think people like to have access to both."
Many publishers are not ready to make the jump to only being on the Internet. The B.A.R's Yamashita does not foresee the day when the paper would transition to being only available online.
"I don't think we are in that position right now," said Yamashita. "I think there are a lot of other possibilities to explore before you stop printing the paper."
It will be up to readers to decide if they want the B.A.R. to remain a printed product or solely become an online news source, he said.
"It depends on the gay community itself and if they feel we are providing a valuable need, which I think we are," he said.
Palmer agreed that there would always be a need for the gay press.
"There is some feeling out there of do we even need gay newspapers anymore? I disagree. We will always need a voice of our own and an outlet of our own," he said.
Those gay media companies that are run well will survive, said O'Connell.
"Those that focus on what we do best, which is covering our community, and focus their budgets on their editorial staff and are not afraid of the Internet, that are able to embrace and be creative and smart on how the Web can enhance the paper, will survive this economy," she said.
01/22/2009
http://www.ebar.com/news/article.php?sec=news&article=3656
by Matthew S. Bajko
m.bajko@ebar.com
The staff layoffs and downsizing plaguing mainstream news outlets is also hitting gay media newsrooms as advertisers pull back due to the faltering economy.
The financial woes have led many LGBT media outlets to reduce page counts, lay off writers, and scramble to find new sources of revenue. One paper, the New England Blade owned by HX Media, shut down last October.
"I know some papers are more stretched than others. Some are victims due to the economy," said Bob Witeck, the owner of an LGBT-focused marketing firm based in Washington, D.C. "It is worrisome."
This month, San Francisco-based PlanetOut laid off 33 percent of its workforce as it prepares to merge with Los Angeles-based Here Networks, which acquired an 80 percent stake in the faltering online LGBT company for reportedly $5 million.
It was just the latest announcement of an LGBT media company's woes. Gay publications across the country have instituted various cost-saving measures in order to survive.
Chicago paper Windy City Times closed down it newsroom, and reporters and editors now work from home. The Advocate went to being a monthly instead of every other week, and folded its OutTraveler into the magazine. Cleveland's Gay People's Chronicle went from being weekly to twice a month.
"I would say that the publishers I have talked to are very conscious of their budgets and running their businesses and are being as lean as they can be," said Chuck Colbert, who covers gay media for Press Pass Q, a newsletter focused on the LGBT press. "I don't hear any panic. I hear concern, and people say in terms of the recession, they will pull out of it and the goal is to remain standing."
The National Gay Newspaper Guild, made up of gay-owned publications across the country, is also facing its own troubles. The group is in a "retooling mode" as it figures out how to operate in a new media landscape, said the guild's president, Sue O'Connell, who co-owns the Boston-based weekly LGBT paper Bay Windows and the Edge-branded LGBT Web sites.
"We are trying to figure out what direction the guild is going to go in," said O'Connell.
LGBT newspapers throughout California have been hit especially hard, as local governments struggle to balance their budgets and state lawmakers remain deadlocked on how to deal with a $42 billion deficit. The economic uncertainty has impacted many of the papers' loyal local advertisers.
And with the passage of Proposition 8, which eliminated same-sex marriage in California, the advertising bonanza from wedding-related businesses that LGBT news outlets in the state saw beginning in mid-2008 dried up after the November election.
Car dealers, once a major source of ad dollars, have also disappeared from the pages of local gay papers. Hurt by the ongoing woes besieging both Detroit's Big Three automakers and foreign car companies alike, local dealerships can no longer afford to advertise or have closed up shop.
The lost revenue is taking a noticeable toll on gay publications. San Diego's 20-year-old Gay and Lesbian Times reduced the size of its weekly editions and cut its staff last year. To further save money, the remaining employees are taking staggered unpaid leaves throughout January and February.
"We've trimmed expenses, and we're publishing a leaner product – but you'll find we have not sacrificed our news content and value," wrote the paper's publisher, Michael G. Portantino, in an editorial in the January 1 issue. "Our team members are all in, and they are convinced this magazine is a viable, valuable community resource. As a team, our staff will weather the storm, and our sales staff will assist clients in doing the same."
San Francisco-based lesbian magazine Curve let go five people last year. The publication's founder and publisher, Frances Stevens, said she had informed her staff of the magazine's financial problems prior to the layoffs.
"I will lay off people before we can't make payroll. It wasn't a surprise to them," said Stevens, who launched the magazine in 1990 under a different name.
The magazine has dropped down to 70 pages each month from 100 last year, and Stevens also shaved a quarter-inch from the magazine's page size, a savings of some 20,000 pounds of paper over the next 10 months. Along with reducing her paper costs, the shrinkage cuts down on what she pays for ink and postage, said Stevens.
Troy May, publisher of San Jose LGBT magazine OutNow , said the state's budget problems have led to two of his ad contracts being canceled. Santa Clara County pulled its HIV prevention campaign, and the city of San Jose canceled its ads aimed at attracting gay people to move downtown.
"It's been really tough. We are just barely keeping our head above water," said May, though he added he has "no fears of going under any time soon."
Another blow came when the American Musical Theater of San Jose, a major advertiser, went bankrupt. The company had renewed its ad buy, and still owes May several thousand dollars for past ads.
"We likely will not see that money," said May, who took over the monthly magazine three years ago. "Luckily, we just got a contract with the San Jose Rep for 2009. It is a brand new account."
To make ends meet, May lowered his rates this year to entice advertisers to remain and is using fewer freelancers. His printer reduced May's rate, and the magazine has scaled back from 48 pages down to 40 in January, and most likely to 32 for the February issue.
"It is going to be a tough year, I think. We will be scrambling for every ad we get," he said.
The Bay Area Reporter has not been immune from the economic downturn. Beginning with its January 8 edition, the 38-year-old weekly cut its page count down to 32 pages and has kept the smaller size for the last two weeks. It was the lowest number of pages for the paper since the early 1990s.
General manager Michael Yamashita, who has worked at the B.A.R. since 1989, said the paper's advertising has declined across the board. National advertising and local ads began decreasing in 2007 but the falloff escalated in recent months.
Last year the paper was able to capitalize on the state's same-sex wedding boom, publishing a special 16-page insert filled with ads from florists, jewelers, and caterers. Should the state Supreme Court throw out Prop 8 this summer, Yamashita said he would expect those advertisers to return.
Until then, rather than cut staff, the paper is keeping its page count down and did not raise its ad rates this year.
"We are willing to work with all of our advertisers to see what we can do to be mutually helpful for each other," he said. "I don't think it is a gay phenomenon. It is a phenomenon that impacts anybody who has any dealings with this economy."
In Sacramento, local LGBT paper Outword , which comes out twice a month, dropped down to 24 pages from 40 this month. It let go several contract writers and is publishing with just three full-time staffers.
With a print run of 10,000 that is distributed as far north as Reno, Nevada and to Fresno in the southern portion of the Central Valley, the paper sponsors many events in the LGBT community. It still plans to provide free advertising, but will no longer run full-page ads.
"Everyone looks to us for free ads. We are trying to keep an eye on those," said Fred Palmer, the paper's publisher. "We can't sponsor every event. We are asking those organizations to support us and buy ads in the gay paper so we are around next year."
Unlike other gay papers that attract national ads, the 14-year-old paper's advertising is largely reliant on local businesses. Last October, many advertisers began pulling out and have yet to return.
"We got hit with a triple whammy. The economy hit so everybody in the mainstream media is down and the alternative press is down. Then the lack in holiday ads hit us," said Palmer. "A large majority of our community donated to Prop 8 and that hit people in November."
Palmer, who is also a founder and president of the Capitol region's Rainbow Chamber of Commerce, said similar to gay business owners who buy ads in his paper, he was distracted by the fight against Prop 8.
"I spent a good chunk of my November doing post-Prop 8 stuff as an activist and was not selling ads like I normally do," said Palmer.
OutNow's May said he prays same-sex couples will soon be saying "I do" again in California.
"If gay marriage was allowed in this state, then gay and lesbian publications would just be filled with advertising," he said. "We are really looking to the court to overturn Prop 8. We know that will help keep us afloat through 2009."
Colbert noted that the winter months are always slow in terms of advertising for gay papers.
"When summer picks up it may be a better indicator of how people are weathering this," he said.
Many gay papers make the bulk of their money off their annual Pride issues, when an onslaught of advertising triples the size of the papers, or with specially themed issues on travel or health issues. Publishers are holding out hope the same increase in ads around those special editions will be seen this year.
"A large portion of our revenue is based on our romance, travel, and Pride issues," said Palmer.
New revenue streams.
To make up for the lost ad money, many gay publications have taken various steps to bring in more revenue. They are sending out e-mail newsletters readers subscribe to online that come with ads in addition to links to the latest edition's stories.
Last year, San Diego's paper instituted online coupons for local businesses that readers can download. OutNow started a business directory it promotes in each issue and on its Web site. It also launched its own online store to sell clothing and other merchandise branded for its readers in Oakland, San Jose, Palm Springs, and the Santa Cruz area.
"It is another way to not only earn revenue but give something to the community that they don't already have," said May.
In an effort to bring in more cash, some publications host their own events, such as Outword, which hosts happy hour events, and Curve, which is holding parties in San Francisco and Sacramento this month to celebrate the final season of Showtime's The L Word .
"A lot of us are trying to be creative for our clients. They are all asking for more bang for their bucks," said Palmer.
As companies slash their marketing budgets, Palmer said he is trying to point out their ad dollars will go farther in the gay press compared to daily newspapers or glossy magazines.
"Our rates are much, much lower than daily and weekly alternative papers," he noted. "Even with the economic downturn, gay couples will still travel, eat out, and do a lot of things where we spend money."
Witeck said gay media continues to be one of the more affordable ways for advertisers to reach consumers.
"The cost per eyeballs in the gay media is much less compared to most other print media around," he said. "I am hopeful local advertisers will see the value."
Stevens with Curve said she is pushing to increase her subscriber base as a way to makeup for decreased ad revenues.
"They will make sure we are still around another 20 years," said she of her readers. "When the dust settles Curve will still be on top and a lot of other magazines won't be around."
Portantino also sounded a positive note for the future of his publication.
"In 20 years – 20 years from this date today – the Gay & Lesbian Times will continue its record of fair and accurate reporting, generous giving, and providing resources to members of our community," he wrote. "We are not going anywhere."
Full disclosure, Matthew S. Bajko is a freelancer for OutNow in San Jose and had his monthly column in Sacramento's Outword dropped at the end of December.
01/22/2009
http://www.ebar.com/news/article.php?sec=news&article=3655
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