PlanetOut, Here Networks merge
Here assets include magazines, TV company, Web sitesHere Networks on Wednesday completed a merger with the struggling PlanetOut to create a new company called Here Media.
Here targets the gay, lesbian, bisexual and transgender population through the Advocate and other magazine titles as well as through movies via Here Studios and Here Films. Other assets include a television company and online properties Gay.com and Planetout.com.
Paul Colichman and Stephen Jarchow, who produced "Gods and Monsters" and other films, are CEO and chairman of the board, respectively, at Here. Also on the board is PlanetOut chairman Phil Kleweno.
Here employs 200 people in New York, San Francisco and Los Angeles. It's a public company though not actively traded. PlanetOut shareholders received 20% ownership in Here.
The merger preserves the remaining assets of PlanetOut, a once high-flying Internet company that had struggled with losses and debt as it ventured into offline businesses. Its shares once traded for more than $100 apiece, but even an investment from a hedge fund controlled by Bill Gates didn't save PlanetOut from slipping into penny-stock status before Here swooped in to rescue it. When the NASDAQ delisted the stock last week, it traded at 38 cents.
In the past two years, PlanetOut was raising money by selling assets, including its RSVP Vacations unit, which runs sea cruises catering to gays and lesbians, and its magazine unit, which includes the nation's oldest LGBT periodical, the Advocate.
PlanetOut acquired the Advocate, Out and other titles for $32 million in 2004, then sold the publishing business to Here last year for just $6.5 million, prompting howls of mismanagement from Wall Street analysts once bullish on PlanetOut.
While PlanetOut's market capitalization was less than $5 million, Here's deal valued the company at closer to $16 million, Colichman said, by issuing special stock with downside protection of no less than $4 a share in the case of liquidation, dissolution or a sale of Here.
"Our goal is simple -- to run the company real well and make the stock more valuable than $4," he said. "We're taking incredibly valuable assets and putting them in well-managed hands to create a giant win for everybody."