More trouble for increasingly troubled gay media giant, PlanetOut Inc. As we reported last month, the owners of Out and Gay.com have been experiencing a bit of decline in recent years: stock prices have plummeted, publishers are leaving and people have canceled their subscriptions. Now comes distressing word that the once titanic PlanetOut’s sinking to the bottom.
The mega corporation recently announced that it’s lost approximately $6.9 million in first quarter trading – a staggering amount considering they only lost $132,000 during last year’s first-quarter. Not the best news for investors, which may explain why the queer institution’s still hemorrhaging homo-bucks. From Forbes:
PlanetOut shares fell 63 cents, or 25.3 percent, to $1.86 in afternoon trading. Earlier, shares traded as low as $1.45, well below their 52-week low of $2.38.
Operating costs grew to $23.3 million from $17.7 million in the year-ago period, as revenue costs grew to $12.3 million from $9.4 million.
The once-proud leader of gay media has also reduced this year’s profit projection from $75-80 million to $70-80 million.
Of course, such losses aren’t uncommon in the wild world of big money business, but PlanetOut’s woes don’t end there. San Francisco Chronicle reports:
PlanetOut is under the gun to come up with an additional $15 million to meet the terms of an existing loan, or face default.
If it’s unable to get the financing, the lender could foreclose on PlanetOut’s assets, a potential death knell.
The company, which had $11 million in cash and short-term investments at the end of the first quarter, said it would run out of money by year’s end without additional financing.
Some people – including CEO Karen Magee – suggest PlanetOut’s being dragged down by the less-than-profitable gay cruise line, RSVP, which prides itself on hosting the only gay trans-Atlantic journey. Other people point the finger at stunted advertising sales.
Despite these distressing degeneration, execs remain optimistic. Magee says,
We’ve got major work to do at PlanetOut to generate the healthy revenue growth and solid earnings performance that I believe this company is capable of producing.
Magee and financial analyst Richard Ingrassia agree that a turnaround may take up to two years.
Not everything’s looking so gloomy over at PlanetOut, however. Their glossy fag-rag, Out, may not be raking in the advertising dough, but their circulation continues to grow. The monthly increased its circulation by 20,000 over the past twelve months, as has PlanetOut’s publishing flagship, The Advocate. Perhaps PlanetOut needs to get out of the travel business and focus on sustaining its print power – a life-preserving move Magee suggests may be around the corner.