In its 15 years of existence, online-only news and culture publication Salon has tried it all: paywalls, subscription plans, e-commerce, building out new coverage areas and reeling in its print magazine-size articles to more digestible web fare. Through the media industry’s various ups and downs, it has survived. But as CEO Richard Gringas told the WSJ today, those efforts have only gone so far; now it’s looking for a lifeline in the form of an equity partner or an outright sale. While the company wouldn’t say how serious it is about finding a suitor, its finances suggest that now is about time.
In April, Gringas told us that while “we do see signals of advertising coming back … it’s not coming back as fast as we’d hoped.”
And, indeed, over the last six months, the company’s revenue has increased by roughly 25 percent to $2.5 million, while it has managed to narrow its losses to $1.3 million from $2.3 million during the same period a year ago. But Salon still needs more money. The company warned in its most recent filing with the Securities and Exchange Commission that it anticipated “continued but reduced operating losses” and would need up to $1 million in new funding to meet its operating needs for the remainder of the fiscal year.
Historically, the company has relied on funding from board chairman (and Adobe Systems (NSDQ: ADBE) co-founder) John Warnock and investment backer William Hambrecht to make up its shortfalls, but it said it was also looking for “external financing from potential investors in the form of additional indebtedness or through the sale of equity securities in a private placement.”
So, what strategic parties might be interested? One possibility is the Washington Post Co. (NYSE: WPO), which shelled out $17 million to buy rival Slate six years ago; the addition of Salon could make sense since the two sites share similar audiences, although there are questions about how well Slate itself is doing in the Post’s hands.
The Huffington Post has said publicly that it no longer considers Salon to be a competitor; if it folded in Salon, however, it could quickly add a roster of additional, well-known columnists and it has been very acquisitive lately.
Salon’s well-known brand could also be attractive to either AOL (NYSE: AOL) or Yahoo (NSDQ: YHOO), which have both shown a willingness to spend for high-quality original content. Still, AOL has expressed a desire for news sites that have significant cache within a singular vertical, like Techcrunch, while Yahoo has focused on content plays that can greatly expand the amount of content it can offer, as the Associated Content purchase did. Still, stranger things have happened.
As the WSJ piece points out, current head of the merged Newsweek Daily Beast Co., Tina Brown actually had discussions about combining Salon with her now defunct Talk magazine before that magazine was shuttered eight years ago. Despite the usual twists and turns that led to the marriage of Newsweek and Daily Beast under IAC (NSDQ: IACI), it’s a stretch to think that Barry Diller and company would have the stomach of another unprofitable publication.