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USA: Gay media empire in cash crisis

Tue 15 May 2007 In: International News

The San Francisco owner of Gay.com, the Advocate and Out magazines has disclosed that money for the LGBT media outlets will run out before the end of the year without an urgent infusion of cash. The dire situation is a consequence of owner company PlanetOut's declining subscriptions for personal ads, a shortfall in advertising revenue and trouble booking passengers on its gay-oriented cruises. PlanetOut says it lost USA$6.9 million in its fiscal first quarter, compared with a $132,000 loss last year. Revenue totalled $16.8 million, down from $17.6 million during the same period a year ago. Spooked by the results, investors sent PlanetOut's shares tumbling 33% over two days to close Friday at $1.64, the lowest point since the company's initial public offering three years ago. "This is deeply disappointing and concerning to me and the rest of the management team," Karen Magee, PlanetOut's chief executive officer, said in a conference call with analysts. PlanetOut must raise 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. Magee laid part of the blame for PlanetOut's poor performance on its RSVP travel agency, which offers cruises to destinations such as the Caribbean. Passenger occupancy has been less than expected and, as a result, the company has had to offer steep discounts to attract travellers and pay penalties to cruise lines. Separately, PlanetOut's advertising sales, both online and in print, have been disappointing. Subscriptions to online personals have also lagged amid growing competition from other gay-oriented Web sites in addition to social networking giants MySpace and Facebook. In a note to investors, Richard Ingrassia, an analyst for Roth Capital Partners, said it's possible that PlanetOut would sell its travel business. Overall, he said, the company is still unchallenged in terms of reaching the gay demographic.     Ref: San Francisco Chronicle (m)

Credit: GayNZ.com News Staff

First published: Tuesday, 15th May 2007 - 12:00pm

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