| Major Gay Media Merge, PlanetOut.com To Go Lesbian |
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by Michael Wilke
The two largest gay media companies, LPI Media and PlanetOut, have merged in search of circulation and advertising growth, creating a single company now controlling the biggest national gay magazines, The Advocate and OUT, and web sites Gay.com and PlanetOut.com.
The move creates simpler access to the gay market for big advertisers, and presents a balance to the new but powerful gay TV network LOGO from major media company Viacom. PlanetOut executives say their merger can drive growth to the circulations of their print titles, and bring deeper content to their web sites. Meanwhile, others have some concerns about the narrowing of independent media voices in the community.
San Francisco based PlanetOut Inc. purchased LPI Media Inc. for $24 million in cash and $7.1 million in seller-financed debt on Nov. 9, nearly doubling the company's revenue and edging up PlanetOut's stock price (the clever ticker name is LGBT). They promise no layoffs as LPI becomes a subsidiary of PlanetOut.
The same acquisition was originally explored in 2000 but crumbled. Since then, competition has grown with the arrivals of Viacom and Sirius Satellite Radio, and Window Media consolidating Genre and gay newspapers in DC, New York, Atlanta, Houston, and South Florida.
Due to heavy monthly traffic and 3.5 million active members, Mark Elderkin, president of PlanetOut, says the company recently helped grow circulation for Men's Fitness, Details, Instinct and Genre magazines by a combined 100,000 subscriptions, something now planned for OUT and The Advocate, which have never had more than 136,000 readers each.
"This is an amazing opportunity to drive our circulation that we wouldn't have been able to do through direct mail," says Joe Landry, now senior vice president, publisher of LPI. Ad price increases remain an unknown.
For itself, PlanetOut recently attracted new advertisers not in gay magazines, including Sears Roebuck & Co. and DaimlerChrysler's Dodge Charger and Crossfire.
Advertiser Reaction
"I think it's a defensive reaction to LOGO," observes John Nash, who guides Subaru of America in the gay market, president of Moon City Productions. Nash feels optimistic about the deal in the short term, but like others he cautiously offers, "I'll have to see how they practice business together."
The move brings some advertisers under a single "roof." Subaru has had a 10-year presence in gay magazines and is a charter advertiser on LOGO, but does not run ads online. "Many categories can't advertise on their sites," Nash says, noting discomfort with the sexual nature of chat rooms. "People on there are not exactly looking to buy a car."
Online travel booker Orbitz is not on PlanetOut's sites due to an exclusive deal with competitor Travelocity, but is in LPI publications and a charter LOGO advertiser. Jeff Marsh, GLBT travel advisor to Orbitz, is enthusiastic about the deal, especially in light of LOGO's potential strength. "What if LOGO gets a program that generates the kind of buzz ala 'Desperate Housewives' or 'Lost'?" he says. "LOGO online could become a bigger portal (than existing gay sites). I don't want all of the power to be focused with any one entity."
PlanetOut.com Site To Go Lesbian
Perhaps the biggest change out of the deal may be for PlanetOut.com. Once a strong competitor to Gay.com, the site fell into stagnation after it was acquired in 2000. Editorial staff were cut and distinctions lost between the two sites, while advertising was lavished on Gay.com, operating in several languages for Europe and Latin America. Nash calls PlanetOut.com "a shell" of its former self.
PlanetOut purchased the non-commercial newsletter Out & About to power the travel sections of both sites, so how it will deal with LPI's year-old competitor Out Traveler (still mailed with OUT) is unclear. Marsh says "It's a big question mark" and represents more loss of independent gay media voices, continuing a trend started with the mergers of Gay.com-PlanetOut.com and OUT-The Advocate, both in 2000.
But change is now afoot, staking out a new positioning for the foundering site. "PlanetOut.com doesn't have a focus," acknowledges Elderkin. "Our goal for 2006 is to create it into a women's brand."
Cynically, Marsh says, "I don't expect them to throw a lot of resources at it" as a lesbian site any more than before, but thinks "they have an opportunity to make it a premiere lesbian destination." There aren't yet any leading online lesbian sites, though there is LesbiaNation.com, operated by gaywired.com owner Hyperion Interactive Media, independently owned Lesbian.com, AfterEllen.com, and the newly launched GaydarGirls.
Asked if LPI may now consider launching a lesbian print title too, Landry of LPI said the notion could be considered during upcoming meetings.
PlanetOut's acquisition of LPI will provide benefits for advertisers seeking larger gay audiences, and strengthen the media properties in an unforgiving media world. Yet it also increases the importance of independent players such as Instinct, Passport, 365Gay.com, and GayWired.com -- for both advertisers and consumers.\n
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