Is the End Near for Salon.com?

  |  February 17, 2003   |  Comments

Once again the hip online journalism and commentary site is on the brink of disaster as the ad revenue just isn't there and the subscription model isn't quite making it.

Can Salon.com be saved? The financially troubled online magazine, widely praised for its editorial content, is facing a financial crisis so severe that its very existence is threatened as advertising revenues have continued to decline.

In fact, for several weeks the site has been touting "Salon's New Deal: Two ways to access Salon articles: Subscribe, or view an ad. You can pay our low subscription price (as little as 5 cents a day) or you can click through a multiple-screen advertisement."

A number of folks (maybe 50,000 at $30 a pop) have subscribed, but now publisher Salon Media Group Inc. , its stock price down to 4 cents a share, has said that February may be its last month unless money can be found to pay the rent for its San Francisco office space.

Salon, which says in its Securities and Exchange Commission filings that the company believes that its network of Web sites "combines the thoughtfulness of print, the timeliness of television and the interactivity of talk radio," posted a net loss of $1.3 million, or 9 cents per share for the three months ended Dec. 31, 2002.

That compares to a net loss of $1.4 million, or 10 cents per share for same period a year earlier.

In its SEC filing, the company said that "if it is unable to complete the financial transactions it is pursuing or if it is unable to otherwise fund its liquidity needs, then it may not be able to continue as a going concern. Liquidity continues to be a constraint on business operations ... on Jan. 29, 2003 Salon received a demand letter for $0.2 million from the landlord. Payment of this demand would have a great adverse effect on Salon's current financial position."

Still, CEO Michael O'Donnell was quoted as saying in published reports that he is confident that things are going to come together and "we'll be able to complete the financing in the next 30 days ..." He was quoted as saying an agreement had been reached with the landlord.

Why can't Salon.com make it on ad dollars? Editor David Talbot says on the site: "... consider this stark fact: Approximately 80 percent of the ad dollars on the Web are funneled to the top 20 sites, all of which are run by corporate giants. The result is there's not much left over for independent publishers like Salon."

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