Mainstream media have struggled to converge online and traditional print sources, but two alternative media stalwarts are now giving it a try.
San Francisco-based PlanetOut Partners Inc., an online gay media company, acquired Los Angeles-based gay publisher LPI Media Inc. last month for $24 million in cash and $7.1 million in seller-financed debt.
With combined revenue of about $60 million, the deal creates the largest gay media company in the world with ownership of the two biggest national gay magazines, the Advocate and Out, as well as the popular websites Gay.com and PlanetOut.com. The deal also gave the company ownership of Alyson Publications, LPI’s book publishing arm.
“We expect to build circulation for Out and the Advocate using the reach of our existing online model,” said Chief Executive Lowell Selvin. “Our currently held belief is that there is a great deal of power in those two print brands. We will use that model to drive traffic there.”
Founded in 1995, PlanetOut is no stranger to acquisitions. PlanetOut Partners Inc. was created in late 2000 by combining Online Partners, the parent company of Gay.com, and PlanetOut Corp. into a single online entity. The Web sites together boast more than 5 million unique visitors each month, and have 3.5 million registered members.
Gay.com is male-focused and used primarily as a dating and online introduction site, with paid services such as video chat and networking being the site’s biggest revenue-producers. PlanetOut draws more of a 50-50 split in male and female visitors, with more serious content appealing to what Selvin called the “Will and Grace” visitors. Shopping services also provide revenue.
Meanwhile, the Advocate, established in 1967, covers news and entertainment, and has a biweekly circulation of 120,000. Out is a lifestyle magazine founded in 1992 that covers fashion, trends and society and has a monthly circulation of 130,000. The two publications draw a balanced revenue stream between advertising and circulation.
Analysts say that while the merger won’t change the landscape of gay media, it was a good move.
“They’re not your average Wall Street company,” said analyst Jim Friedman of SG Cowen & Co. LLC. “Now they can take content from the magazines and really enhance what’s on the PlanetOut Web site. They will be able to capture recurrent ad revenues from the site if online users have a richer content experience. On the flip side, they can use the Web sites to generate print readership.”
Post-acquisition revenue is expected to come from several sources, with about 45 percent coming from subscription services, 41 percent from ads and 14 percent from e-commerce transactions.
So far, PlanetOut is taking a hands-off attitude toward the newly acquired magazine side of the business, and presently there are no plans to alter content or design.
While the Web sites could see redesigns in the future, Selvin said the plan is to take convergence in print and online editorial content slowly. “Content integrations will be more gradual, because it’s more complex and there are issues of brand identity. It’s about caution rather than jumping in and making wholesale changes,” he said.
The company has brought in Bob Cohen, a longtime New York publishing consultant, to guide the publications. He said there are no plans to consolidate the print and online operations or make sweeping staff changes.
“This is not about PlanetOut people coming in and running the print business, LPI is fundamentally a publishing company and (PlanetOut) doesn’t have experience with that. The only management change they imposed was me, and that’s probably the way it’s going to be.”
However, he said cross-advertising between the online and print platform is a top priority, while Selvin said the company has immediate plans to begin bundling Out magazine subscriptions with PlanetOut’s premium paid services.
Company executives said they have heard criticism that the merger means less independent voices in the gay media world. “People were worried about the stifling voices of dissent and basically, the freedom of press,” Cohen said. “Those voices have quieted down, because I think they’ve seen that we haven’t made changes in editorial policy. We will always encourage strong coverage of news.”
