PlanetOut Going Down?

More trouble for increasingly troubled gay media giant, PlanetOut Inc. As we reported last month, the owners of Out and 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.

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  • dan

    its not really as good as it looks on the advocate/out subscription front. anyone who signs up fora new planet out or membership automatically gets a free subscription to both. the renewals when those free subs run out are really really low. in addition, the new memberships on the sites are dropping, so their ability to roll new memberships onto their subscription base will begin to drop off. their a trainwreck basically, one that has been dragging on for months now…did you guys listen to the part of the conference call where an investor told karen magee that since basically they admitted they had done a really crappy job running the company that they should work for free…it was the last call and it was aweseome. she froze like a rabbit facing a wolf…

  • Ryan Adams

    They should sell off the cruise portion.

    However, I have to say, they have two somewhat successful magazines and two websites with a lot more potential, if they can leverage it. With some innovation and a little shaking up, they should get their act together and be a decent company. That’s a lot of ifs, but I just can’t see it not happening at this point.

  • nystudman

    Agreed with Dan. I just got a comp subscription to Out, and I don’t know how, so they’re obviously trolling for higher ad numbers. That said, the mag is better than the other ones out there – though that’s not saying too much, but still … The problem is the same plaguing all print companies – how to leverage the web. & yes, Atlantis is kicking RSVP’s butt, but that’s because Atlantis knows how to cater to the circuit crowd. Maybe RSVP should get some decent djs. Or just sell the company & close unprofitable publications that have no business existing anyway, like Traveler & the Poz rip-off.

  • dan

    re: specialty publications up for sale. It’s ironic they would take this step, since according to their Q1 filing, this was the only division of the company that showed a profit. I guess since they’ve always been a money loser, they couldn’t afford to have a division that broke that streak. Maybe it made the rest of them look bad? Either way, they fired Caryn Goldberg, the publisher who turned Specialty into a porn powerhouse, last week, so now its just as adrift as the rest of the ship. They really have no idea what they are doing over there. Its crazy.

  • Anonymouse

    Dan things aren’t as bleak at Planet Out as you think. It’s a good company and the question by the shareholder to Karen was unfair. She is not responsible for the RSVP mess, that deal was made long before she came aboard. As a result she has been paying for the mistakes of others. In the cruise industry you have to have long lead times for advertising cruises, and PlanetOut didn’t have that ability having bought a company that had already signed contracts for cruises, but hadn’t started promoting them. In their conference call you heard that they were taking positive steps to work on their core competencies. PlanetOut owns the markets they are in, have a competent leadersihp team, and they have the will to become successful again.

    I look back and think of the days when we supported gay companies rather than trying to tear them down. PlanetOut is doing it’s best to be the best, there is never a time that they don’t have the best interests of the gay community in mind. Have you bought a subscription to The Advocate recently? I have, it costs me little, gives me a magazine I enjoy, and helps support a gay company.

  • dan

    actually anonymouse, things are much much worse. it was an analyst not a shareholder who asked the question and it was a good question. and no, there were no concrete plans laid out. magee said, we’ve screwed up, we dont know what we’re doing, and we’re hopefully going to take some steps to figure out what we’re doing. thats why the question was asked.
    i have never supported something for the singular reason that its gay. what a stupid reason to support something. thats like supporting something because its yellow. i support things that are good. why would i do otherwise? to answer your question specifically, the advocate is boring, and out of date by the time it arrives. the interviews are pointless and unrevealing, and the news is two weeks old. so, no i wouldn’t get a subscription, and i don’t need to, because it arrives in my mailbox every two weeks, for free, even though i have never had a subscription or paid for one…
    anyway, do what you need to do, but i believe in meritocracies, not blind identity based allegiance,

  • Mav

    Think harder, and look at previous earnings calls for LGBT to get some historical view of all this. The RSVP/advertising excuses are just the latest thing to pin the blame. Magee was there all along on the board, she’s not just walking into a mess that somebody else created. She is utterly flailing, firing seasoned people who could (if listened to) have pulled out a success or two. The board should all be recalled, they have no clue on running a business.

  • adamblast

    I don’t know about OUT–other than the fact they can hardly give them away–but THE ADVOCATE is a mere shell of its former self, and not worth paying money for.

    I pick up my free copy weekly in the lobby of the local gay/lesbian center. It’s worth maybe five minutes of glancing through. Nothing but a handful of glossy press releases and advertorials.

    …which is truly a shame, since THE ADVOCATE was once the most important, vital (and only) gay publication in the US.

  • Jason W

    What an atrocious mess PlanetOut is in. They have a failing cruise business. They have print publications (and let’s be honest… print publications are “on the out”). And they have which has terribly unresponsive customer service. The only reason people use is for chat and associated profiles. And being that they can’t seem to control spam in their chat rooms, people are losing interest in that.

    It’s a sinking ship, and I’m happy I dropped my stock in them long ago.

  • Mav

    The stock is now in a free fall… Down another 20% today, to 1.13, an all-time low.

  • tt

    For any of you that care….

    Gay media is dying….period…all of them.

Comments are closed.