buyer: PlanetOut | seller: LPI Media | price: $31 million| date: November
takeaway: An online media company looks to print to double its revenue and set the stage for future growth.
The $31 million sale of LPI Media, publisher of gay and lesbian magazines Out and The Advocate, in November 2005, wasn’t one of the larger magazine deals of the year but was one of the more significant deals because it bucked the trend of print companies scrambling to buy online properties, and instead had an online media company buying magazines as a strategy to take it to the next level.
PlanetOut, the San Francisco-based owner of online communities Gay.com, PlanetOut.com, Kleptomaniac.com and OutandAbout.com, had been eyeing LPI for quite some time. "We’d been working on this for a good six years," says PlanetOut chairman and CEO Lowell Selvin. "We first approached LPI in late 1999, then the downturn hit. We decided to wait until we could go public and put some significant acquisition capital on our balance sheet. One of our first calls was to LPI, and then it was quite the dance over the course of a year."
While most publishers are scrambling to add online properties to spark growth in light of stagnant print ad sales, the addition of LPI Media doubled PlanetOut’s revenue from $29 million to nearly $60 million. On a pro forma basis, for the first nine months of 2005, the combined entity would have had approximately 41 percent of its revenue from advertising, 45 percent from subscriptions and 14 percent from transaction services.
The acquisition has brought a new host of advertisers into the mix for PlanetOut. "We were surprised to find out the overlap of accounts between our online properties and the magazines was only between 15 to 20 percent," says Selvin. "We expected that to be higher. The top five for each medium;always a good barometer;only shared one major advertiser. This is a good opportunity to build our mutual advertiser base."
Going forward PlanetOut is looking to leverage the magazines as value-added services for online subscribers. "In terms of the bottom line;this give us four more properties that we can share and leverage across the platform," says Selvin. "We can grow The Advocate’s or Out’s circulation by bundling those magazines with our premium subscription services online. For us it was never Internet versus print, it was about serving the community."
comments: A very logical marriage.
http://www.planetout.com/ | http://www.out.com/ | http://www.advocate.com/ |