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| PlanetOut, the parent company of several popular gay Web sites, spent $32 million to acquire LPI Media, the publisher of gay magazines including the Advocate and Out. The deal closed Nov. 9. |
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PlanetOut
P.O. Box 500
San Francisco, CA 94104-0500
415-834-6500
www.planetout.com
• 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 March 2000, PlanetOut released a letter of intent to merge with Liberation Publications Inc., publisher of national gay magazines the Advocate and Out. But in March 2001, PlanetOut announced that the merger was canceled, due to several factors including the downturn in the Internet market.
• In December 2000, Online Partners agreed to acquire PlanetOut Corp., creating PlanetOut Partners Inc. The merger closed in April 2001.
• 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, PlanetOut announced it has purchased LPI Media Inc. for $32.1 million
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HOME > NEWS > NATIONAL NEWS
By: ANDREW KEEGAN
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A leading gay Internet company merged with the publisher of top selling gay magazines and books last week to become one of the nation’s largest gay media companies.
San Francisco-based PlanetOut acquired Los Angeles-based LPI Media for $24 million in cash, about $7.1 million in seller-financed debt and will reimburse about $1 million in other expenses in a deal that closed Nov. 9.
The new company, with 275 full-time employees, now boasts a combination of popular Web sites — including PlanetOut.com, Gay.com and Kleptomaniac.com — and several gay publications — including the Advocate, Out and HIVPlus — that will reach 153,800 paid online subscribers and distribute more than 8.2 million copies of its magazines each year, according to information from PlanetOut.
Included in the acquisition is Alyson Publications, a gay book publishing company, and SpecPub, which publishes adult-oriented titles Freshmen, Men and Unzipped.
“This is truly a historic venture,” PlanetOut CEO Lowell Selvin said.
Noting mergers are often viewed with trepidation, Selvin said it’s important to consider the alternative.
“LPI could have been acquired by someone looking strictly at operation dollars,” he said. “But it was acquired by another company serving the LGBT community for its mission, in addition to economics.”
Bob Witeck, whose Washington, D.C.-based public relations company, Witeck-Combs Communications, helped launch PlanetOut in 1995, said the consolidation is a positive sign for gay businesses.
“It’s a huge validation of who we are in the business world,” Witek said. “For the first time a gay, publicly traded company wanted to diversify — it’s very exciting.”
At the same time, Witeck acknowledges that “bigger is not always better” and it will be up to PlanetOut to ensure that gay men and lesbians don’t become simply numbers for a successful company.
Tim Redmond, executive editor of the straight weekly publication the San Francisco Bay Guardian, said he opposes any merger that seeks to “homogenize” content, whether it be straight or gay media.
“While I’m a great believer in the market place, too often mergers in the alternative press result in a mission to extract money from a community rather than serve a community,” Redmond said. “Large media companies can become a Wal-Mart and drive smaller companies out of business.”
Yet, Todd Evans, president of Rivendell Marketing — which sells ad space for publications read by gay men and lesbians, including this newspaper — said the merger is a natural, economic progression.
“The gay and lesbian marketplace is coming into its own and now has the proper platforms available so that any company can pursue the marketplace in the medium that best suites their needs,” Evans said. “This is good both for those pursuing the market but also for the gay and lesbian consumer because now the consumer can get a message in a format that best suites them.”
Gay journalists are divided over the merger, according to Eric Hegedus, president of the National Lesbian & Gay Journalists Association.
“There exists a valid concern of less diversity of voices,” Hegedus said. “But, there is always the possibility of more news content with this merger.”
This was the second merger attempt in five years for PlanetOut and LPI Media. The first try, which began in March 2000, was called off a year later due to the souring of “the economic environment” for Internet companies, Selvin said.
In December 2000, PlanetOut merged with Gay.com.
Last October, PlanetOut became the first business targeting gay consumers to trade publicly on a major stock exchange. Under the ticker symbol LGBT, the company made its initial public offering at $9 per share on NASDAQ.
On its first day, the company sold 4.65 million shares, raising $41.9 million, and closed at $10.40. This week the stock was selling around $8.30 a share.
Two weeks ago, PlanetOut announced revenues of $7.6 million and a net income of $841,000 for the third quarter, up from $6.3 million in revenue for the same period in 2004. For all of 2004, the company reported $25 million in revenue; in three quarters this year, revenue has reached $22.4 million.
In 2004, some 67 percent of the company’s revenue came from premium subscription services, 26 percent from advertising and 7 percent from transaction services, including sales of clothing and DVDs.
According to PlanetOut projections, LPI entities are expected to record $29 million in revenue this year. PlanetOut officials would not discuss additional financial information about LPI.
The Advocate, founded in 1967, has a biweekly circulation of 120,000, up nine percent in paid circulation this year, according to ...
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