According to a press release sent out today by PlanetOut, Inc., it looks as though the company continues to face a doubtful future that might include getting the boot from NASDAQ:
PlanetOut Inc. (Nasdaq: LGBT), a leading media and entertainment company exclusively focused on the gay and lesbian market, announced today that the audit report contained in its Annual Report on Form 10-K for the year ended December 31, 2008, which was filed with the Securities and Exchange Commission (“SEC”) on March 4, 2009, included an explanatory paragraph from PlanetOut’s independent registered public accounting firm expressing substantial doubt about PlanetOut’s ability to continue as a going concern due to its continuing net losses and accumulated deficit. Pursuant to Nasdaq Market Place Rule 4350(b)(1)(B), any company whose securities are listed on one of the Nasdaq stock exchanges that receives an audit opinion expressing doubt about the ability of the company to continue as a going concern, must make a public announcement through the news media disclosing the receipt of such an opinion.
As a result of recent operating losses, PlanetOut has carefully assessed its anticipated cash needs and adopted an operating plan to manage the costs of its capital expenditures and operating activities along with its revenues. As part of this plan, PlanetOut reduced its workforce by approximately 33% on January 16, 2009. [link mine] In addition, as previously announced, on January 8, 2009, PlanetOut entered into a merger agreement with Here Media Inc. and certain other parties, and this transaction is anticipated to be completed during the second quarter of 2009.
If the proposed business combination is not completed, PlanetOut has adopted an operating plan, including further cost reductions, to manage the costs of its capital expenditures and operating activities along with its revenues in order to meet its working capital needs for the next twelve months.
Back in August 2008, the gay media company announced that its placement on NASDAQ (LGBT) might face the chopping block. In January, the company agreed to a merger with Here Media, the same company that bought up PlanetOut’s print publications The Advocate, OUT and others.
PlanetOut isn’t the only gay media conglomerate facing tough times. In February, Gay City News reported that the majority share owner of Window Media (Washington Blade, Southern Voice, Genre etc.) was going into a receivership with the Small Business Adminstration.
There’s no doubt that the news publishing business, especially the LGBT news industry, is going to be facing some tough questions in the months and years to come. Small publications like the one I work for and large conglomerates like Window Media and all those in between will face cutbacks, shrinking page counts and stiffer competition from the online world. How will we survive? Do we even need to survive? Every one says the era of the print media is going, going … gone?
I don’t think the news-media industry will ever disappear. It’s all just a matter of how quickly print news fades away and how LGBT print news publications learn how to adapt. No one has the answers… I guess we’ll all keep waiting for some genius out there to come up with the next big innovation.
Gay City News reports that the investment fund owning a majority share in Window Media (Washington Blade, Southern Voice, Genre) has been forced into receivership by the Small Business Administration:
The investment fund that owns the Washington Blade, the Southern Voice, Genre magazine, and other gay publications has been forced into receivership by the federal Small Business Administration (SBA), which will sell the fund’s assets and distribute the proceeds to investors.
“As a consequence of defendant’s continuing violation… SBA is entitled to the injunctive relief… including the appointment of SBA as receiver of [the Avalon Equity Fund],” the SBA wrote in an August 2008 court filing, which was only recently found by Gay City News.
Avalon, which owns a stake in the company that publishes the New York Blade and HX, was licensed by the SBA as a small business investment company (SBIC) in 2000. Through 2007, it borrowed just over $38 million from the federal agency to invest in gay media properties and a range of other ventures.
As part of its contract with the SBA, Avalon was required to have private money or assets in the fund from sources, such as individual investors, that had a value equal to half the amount it borrowed from the SBA or just over $19 million.
In 2007, the SBA wrote Avalon that it had a “condition of capital impairment” because the value of its private assets had fallen below the required level.
Read more of the story at Gay City News, including the closed lips of Window Media officials (I don’t blame them).
Rumor is several gay newspapers have folded over the past year, although I haven’t been able to get an accurate list of them. This isn’t even to mention the fact that I’ve never been able to find an accurate, up-to-date and comprehensive list of all gay newspapers in the U.S. to begin with.
Newspapers were already in a downward spiral before this economic mess. Here’s to hoping we can all hold on until things get better and finally find a way to survive in a new media world.
And according to one commenter on the Gay City News article, perhaps things aren’t all gloom and doom:
Having researched the SBA and its practices, I know that receivership means that the company has an opportunity to reorganize and preserve assets with an invested officer at the helm. I believe that is what is happening in this situation, and the doom and gloom piece seems to be a bit dramatic. All media companies are in essence in receivership and in search of one buyer to take over the entire portfolio. Why else would this group have put together so many of those titles you listed? The economy dictates, and no matter who is running the company, given today’s economy, it is obvious that the portfolio and all its entities will be business as usual for at least the next few years, when the market rebounds and can support a large network buy, such as this would require.