Is Salon.com Looking to Turn a Page With a Merger?
Publications, both online and print, have been hit hard by the economic downturn over the past few years as advertisers pulled back. While advertising has begun to slowly show renewed strength -- especially for Internet titans like Google and Facebook -- not everyone has benefited from this shifting tide.
In its fiscal second quarter that ended in September, Salon Media Group (SLNM) noted its financial outlook remains challenged, according to its Securities and Exchange Commission filing:
In it second quarter, Salon generated $1.4 million in revenues, up from $1 million a year ago. And its operating loss shrank to $454,000 from $1 million the previous year. The company, however, only had $246,000 in cash and short-term securities and faced a $7.9 million deficit.The Company's operating forecast for the remainder of the fiscal year ending March 31, 2011 anticipates continued but reduced operating losses. Salon estimates it will require between $750 and $1 million in additional funding to meet its operating needs for the balance of its fiscal year. If planned revenues are less than expected, or if planned expenses are more than expected, the cash shortfall may be higher, which will result in a commensurate increase in required financing. During the current and previous fiscal years, Salon has relied on funding from related parties, whom thus far this year provided $1,905 in cash advances, which includes $1,535 as of September 30, 2010 and $370 subsequent to quarter end. The Company remains dependent upon its two largest shareholders for continued financial support while it seeks external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement. The Company is working with outside advisors in its efforts to obtain such funding. However, Salon does not currently have an agreement in place to provide any financing, and there is no certainty that Salon will be able to enter into definitive agreements for additional financing on commercially reasonable terms, if at all.
And it's not the first time Salon has considered teaming up with another publication. Management discussed a merger with Talk magazine publisher Tina Brown prior to that publication's demise in 2002, according to the Journal, and also held merger discussions with other larger organizations.
Salon has had to face not only financial hurdles but Editor-in-Chief Joan Wash also resigned earlier this month from the day-to-day operations of running the Internet site to write a book and serve as a Salon editor-at-large. Whether others will follow has yet to be seen.